OFAC Compliance for FinTech and Payment Companies

FinTech and OFAC: Growing Expectations

FinTech companies and payment processors operate in a regulatory environment that has gotten significantly more demanding over the past few years. Regulators and bank partners expect FinTechs to maintain their own OFAC compliance programs, not just rely on their banking partners to handle screening. If you are building or running a FinTech, OFAC compliance needs to be part of your product and operations from day one.

MSB Registration and Compliance

Many FinTech and payment companies qualify as Money Services Businesses (MSBs) under FinCEN's rules. If your company transmits money, exchanges currency, issues or sells prepaid access, or provides check cashing services, you are likely an MSB. MSBs must:

• Register with FinCEN
• Implement a written AML program
• File Suspicious Activity Reports (SARs) when warranted
• Comply with OFAC sanctions requirements

Even if you are not technically an MSB, your bank partners will almost certainly require you to have an OFAC screening program as a condition of the relationship.

Real-Time Screening

Payment companies and FinTechs often process transactions in real time, which means screening needs to happen fast. A customer sending a payment does not want to wait minutes for a sanctions check. Your screening process needs to be automated and built into your transaction flow.

This is where API-based screening becomes essential. OFACScreen's API responds in milliseconds, so you can screen names as part of your transaction processing without adding noticeable latency.

Customer Onboarding

The onboarding process is your first and best opportunity to screen new users. Before you let someone create an account, send money, or access your platform, screen their name against the SDN List and other relevant sanctions lists. Also collect and verify identifying information so you can distinguish between a true match and a false positive.

Good onboarding screening catches problems before they become problems. It is much easier to decline an application than to unwind a relationship after the fact.

Ongoing Monitoring

Onboarding screening alone is not sufficient. You need to rescreen your user base on a regular basis. New names are added to the SDN List frequently. Someone who passed screening when they signed up six months ago could be designated today. Schedule regular batch rescreens of your entire user database.

Also consider transaction-level screening, especially for higher-risk products. If you process international payments, screen the counterparty names on each transaction.

Bank Partnerships

Almost every FinTech relies on a bank partner (or multiple bank partners) for access to payment rails, deposit accounts, or lending infrastructure. Your bank partner's regulators will evaluate your compliance program as part of their oversight of the bank's third-party risk management.

This means your OFAC program needs to be good enough to satisfy not just your own obligations, but your bank partner's expectations. Common requirements include:

• A written OFAC/BSA policy
• Screening at onboarding and on an ongoing basis
• A designated compliance officer
• Training for relevant staff
• Regular reporting to the bank on screening activity and results

Losing a bank partnership over compliance deficiencies can be existential for a FinTech. Invest in your compliance program early.

Practical Recommendations

1. Build OFAC screening into your product from the start. Retrofitting compliance is harder and more expensive than building it in.
2. Use API-based screening for real-time transaction flows.
3. Run batch rescreens of your user base at least monthly.
4. Document everything. Your bank partners and their examiners will want to see it.
5. Treat compliance as a feature, not a burden. Many of your customers and partners will value working with a FinTech that takes compliance seriously.

OFACScreen provides the API speed and batch screening capabilities that FinTech and payment companies need, at a price point that works for startups and growing businesses.