I am building a fintech app and we want to allow cross-border payments. My investors are asking about our OFAC screening process. Do we really need to check every single transaction manually? Are there any automated tools that are recognized by the US authorities as being “sufficient”? I don’t want to spend our whole budget on compliance before we even launch.
Automation is the only way to survive in fintech today. You cannot do it manually if you have more than a few users. OFAC doesn’t “endorse” specific software, but they do have standards for what a good program looks like. You can check the main website https://ofacblockedfundslawyers.com/ for guidance on building a risk-based compliance strategy for startups. You need a system that updates its lists every day because the SDN list changes very often. Most startups use a third-party API that checks the names in real-time. It is an expense, but it’s much cheaper than the fines you would get for a single violation. My advice is to build compliance into your app from day one. It’s much harder to add it later when you already have thousands of users.
You do not need to review every transaction manually, but you do need a documented risk based screening process with reliable list updates and escalation for possible matches. A third party screening API can be enough for an early stage product if you also keep audit logs and a clear review workflow.
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