OFAC Encourages Risk-based Approach for Compliance on Instant Payment Systems

OFAC urged financial institutions to adopt a risk-based approach to designing sanctions compliance strategies for novel instant payment systems.

In a Compliance Communiqué, OFAC said that institutions that opt to implement a cross-border instant payment system may face a higher risk of sanctions violations than if they relied solely on domestic systems. OFAC encouraged institutions to incorporate sanctions compliance programs into the development process in order to ensure proper controls are in place as new technologies are developed. OFAC also encouraged the use of innovative compliance solutions - including the use of artificial intelligence tools - to manage sanctions risks that could arise in the context of instant payments. OFAC affirmed that it will continue to engage with users and developers of instant payment systems to promote a stronger understanding of sanctions compliance.

More generally, OFAC reminded institutions to tailor compliance programs to assessments of their own risks. To address these risks, OFAC encouraged institutions to develop programs predicated on five essential compliance components: (i) a commitment to compliance at the management level, (ii) adequate assessment of institution-specific risks, (iii) development of sufficient internal controls, (iv) continuous testing and auditing, and (v) proper training on compliance controls and procedures.