So if this payment needed to be stopped in the eyes of the bank then why did they suggest a measure for circumventing their own rules by sending a paper check.
This is kind of funny I recently purchased a bunch of second hard server parts from the excess department of a mid-sized bank and they insisted on checking my name against the OFAC list before completing the transaction. Insane.
What you're missing is that different players in this particular mess have different motivations.
The goal of the OFAC regulators is to stop money from going to terrorists and other bad people. So they prohibit the banks from transferring money to "blue sky" and anyone else on the list. There is no leeway here -- if a bank does not comply the banking regulators have the authority to immediately close the bank an seize its assets and give them to a different bank.
The goal of the IT and operations departments in the bank are to implement the requirements. The IT guys put a simple string match against the text of the online payments. There is no way to add a clause that checks whether it's "really" a payment to the prohibited individual or just someone who stuck a note in the memo field, because computers can't go out and interview the recipient to find out who they are. They also stuck in code to block that recipient from receiving payments in the future because otherwise anyone could circumvent the block completely by simply changing the name on the payment.
The goal of the bank representative that Mr. Dash spoke with was to help her customer. So she suggested sending the paper check. For what it's worth, the OFAC office isn't too worried about the person collecting payment on the check because banks are also prohibited from giving bank accounts to people (or organizations) on the OFAC list.
> So if this payment needed to be stopped in the eyes of the bank then why did they suggest a measure for circumventing their own rules by sending a paper check.
Making everyone accept a system which doesn't make sense is just another step on the path to a dystopia. You'd be surprised at the number of such rules that existed in communist dictatorships.
This is kind of funny I recently purchased a bunch of second hard server parts from the excess department of a mid-sized bank and they insisted on checking my name against the OFAC list before completing the transaction. Insane.