Final answer:
OFAC itself does not mandate a specific type of compliance program for banks, but it does set expectations for a risk-based approach. Banks are also regulated by the OCC and must comply with consumer protection laws enforced by the Fed, which sometimes results in the establishment of detailed compliance programs to address the various regulatory requirements.
Step-by-step explanation:
The Office of Foreign Assets Control (OFAC) is a department of the U.S. Treasury that administers and enforces economic and trade sanctions based on US foreign policy and national security goals. OFAC does not prescribe exactly what form a bank's compliance program should take.
Instead, OFAC outlines certain expectations and leaves it to each institution to create a compliance program that suits its specific needs and risk profile. However, banks are subject to a broader regulatory framework, including oversight by the Office of the Comptroller of the Currency (OCC) and adherence to various consumer protection laws enforced by the Federal Reserve (the Fed).
The Fed, for instance, ensures that banks comply with laws prohibiting discrimination and mandates the public disclosure of loan information.
Banks, in response to the plethora of regulations including OFAC guidelines and consumer protection laws, typically set up robust compliance programs to prevent legal and reputational risks associated with non-compliance.
These compliance programs must include policies and procedures aimed at detecting, preventing, and reporting transactions that may involve sanctioned individuals, entities, or countries. Banks must also provide training to their employees to ensure they understand their obligations under OFAC regulations.
While OFAC provides guidelines and resources to help banks establish effective compliance programs, the specific type and structure of the compliance program is determined by each individual bank.