Exam Prep Q&As Flashcards
Which of the following is not an objective of economic sanctions?
A. To deny resources to targets of sanctions
B. To send a political message
C. To provide the sanctioning country’s industries with a competitive advantage
C. To provide the sanctioning country’s industries with a competitive advantage
Sanctions that the United States may impose against non- U.S. parties for failure to comply with U.S. Sanctions are called
A. Secondary sanctions
B. Direct Sanctions
C. Sectoral sanctions
A. Secondary sanctions
Council Decision 2013/798/CFSP – Concerning restrictive measure against the Central African Republic: What type of prohibition is this?
A. Export Restriction
B. Import Prohibition
C. Arms Embargo
C. Arms Embargo
What is the effect of blocking on property owned or controlled by a sanctions target?
A. It is seized by OFAC and used to reduce the deficit
B. It may not be transferred, paid, exported, withdrawn or otherwise dealt in without authorization from OFAC
C. It is frozen and does not earn interest until the sanctions are lifted
B. It may not be transferred, paid, exported, withdrawn or otherwise dealt in without authorization from OFAC
Why would a policy maker opt for sectoral sanctions rather than blocking or asset freeze prohibitions?
The idea is that they are targeted. The goal is to convince them to stop the behavior, to make it harder to transact without having to asset freeze and make it hard/disrupt the world economy (e.g. Russia/Ukraine War)
UN Security Council Resolution 2441 from the control panel: Answer the following questions:
A. What UN Sanctions regime does this UNSC Apply to?
B. Where does the preamble end?
C. What does this Resolution do? Any new measures?
D. Who should comply?
A. Libya
B. Starts when you see “Acting” under….
C. No new measures, the resolution does nothing new.
It simply “Urges”, “Reaffirms”, & “Calls” member states to do more of the same.
D. Libya
The United Nations imposes sanctions:
A. Against individuals, entities, and countries
B. Against individuals and entities only
C. Against countries only
A. Against individuals, entities, and countries
Which body manages a sanctions regime adopted by the UNSC and typically publishes names to be placed on the UN Consolidated list?
A. Political Affairs Office
B. Security Council Committee
C. Panel of Experts
B. Security Council Committee
Which body reviews requests regarding removal from the ISIL (Da’esh) and Al-Qaida Sanctions UN List
A. Security Council Committee
B. Special Focal Point for Delisting
C. Office of the Ombudsman
C. Office of the Ombudsman
Under the EU sanctions regime, sanctions are imposed by
A. The EU Court Commission
B. The EU Council
C. The EU Parliament
B. The EU Council
What are the EU sanctions programs based upon?
A. UNSC resolutions, US sanctions and EU amendments to UNSC sanctions
B. UNSC resolutions only
C. UNSC resolutions/EU own initiatives
C. UNSC resolutions/EU own initiatives
A new sanctions program against country Z is being
proposed within the EU. After a positive decision, the sanctions are implemented in the EU, and names of persons, entities and bodies are published. EU Financial Institutions (FI’s) instantly receive hits against the names.
- What could be the origin of these sanctions?
- Which EU body will have to decide positively to impose the sanctions?
- Who will implement the sanctions?
- Who provides exemptions to the EU sanctions for listed persons, entities and/or bodies?
- What should FI’s do when they notice circumvention?
- Either from the UN or they are autonomous sanctions - Proposed by the High Representative (HR) or the HR + Commission
- The EU Council
- Member States Locally
- Competent Authority of the relevant Member States
- Report to the Local Competent Authority of the Member States.
Which of the following best describes the concept of freezing of economic resources under EU Sanctions?
A. Preventing their use to obtain funds, goods or services, and preventing the entry of the targeted individual into any EU financial institution.
B. Prohibiting investment by nationals of a target country in designated sectors of the EU economy
C. Preventing their use to obtain funds, goods or services in any way, including, but not limited to, by selling, hiring or mortgaging them.
C. Preventing their use to obtain funds, goods, or services in any way, including, but not limited to, by selling, hiring, or mortgaging them.
Countering America’s Adversaries Through Sanctions Act (CAATSA) is an example of a
A. Statute enacted by Congress
B. Executive Order issued by the President
C. Sanctions regulations issued by OFAC
A. Statute enacted by Congress
What is found in Title 31 of the Code of Federal Regulations at Chapter V, Part 500 to end?
A. Executive Orders imposing sanctions
B. Sanctions regulations
C. Sanctions laws
B. Sanctions regulations
Which department in OFAC does the enforcement of sanctions for the regulated industry?
A. Enforcement
B. Compliance
C. Targeting
B. Compliance
Which of the following best describes secondary sanctions?
A. Requirements on Non US parties that have no contact with the US
B. Requirements on Non US parties that have a nexus with the US
C. Requirements on US parties that have contact with non US entities
A. Requirements on Non US parties that have no contact with the US
Which sanctions regimes contain secondary sanctions?
A. Iran, North Korea, Russia, and Syria.
B. Venezuela, South Sudan, South Korea
C. China, Yemen, and Somalia
A. Iran, North Korea, Russia, and Syria.
SDN Z owns 51 percent of Company A. In turn, Company A owns 49 percent of Company B, but takes an active controlling role in running the company.
- Is Company A considered an SDN by OFAC?
- Is Company B considered an SDN by OFAC?
- For those considered to be SDNs, what action does OFAC require your company to take
- What if you were a company only operating outside of the U.S.?
- Yes it is 51% owned by an SDN
- No but Company A owns 49% of Company B (very good change OFAC can designate)
- Hard to answer, if US company, can’t do business with Company A - if you have assets from Company then Freezing & Blocking may apply.
- 1) Generally, US Law does not prohibit non-us companies from dealing with SDNs however secondary sanctions may apply - exposing you to secondary sanctions.
2) What kind of business are you doing? – transactions buying in US Dollars or selling goods and services – may apply)
Which statement correctly defines facilitation?
A. Facilitation occurs when a non U.S. person helps someone perform a transaction that the U.S. person could not take part in directly B. Facilitation occurs when a U.S. person helps someone perform a transaction that the non U.S. person could not take part in directly C. Facilitation occurs when a U.S. person helps someone perform a transaction that the U.S. person could not take part in directly
C. Facilitation occurs when a U.S. person helps someone perform a transaction that the U.S. person could not take part in directly
What is the First Line of Defense when applied to internal controls?
A. The business
B. The auditors
C. The compliance team
A. The business
As the sanctions compliance officer at your U.S. company, you have overseen the recent deployment of your company’s first sanctions screening tool. You are called into a meeting with your boss to congratulate you on this achievement. The boss mentions that now that this “screening thing” is working, you should be free to work on other areas of compliance now since the company should be fully compliant with OFAC now.
What should you convey – diplomatically, of course – to help them understand what else needs to be done?
Screening is an essential component, but it is only part of 1 component (1 internal control among several internal controls), Mgmt commitment, risk assessment, internal controls, testing and audit, and training. Even with screening, you’re constantly updating, and constantly testing. It’s a great start but it is just a start.
OFAC 50% Guidance: Which companies are considered to be blocked? Explain your answer.
SDN: MR. X owns 50% of Company A and Company B. Company A owns 25% of Company C and Company B owns 25 % of Company C.
Tip. Visualize all parties subject to sanctions in Red. e.g. MR. X (red box) since he owes 50% of Company A & B they are both red boxes. Because Company A & B have 25% stake in Company C 25% + 25% = 50% owed by SDNs.
All companies are sanctioned.
OFAC 50% Guidance: Which companies are considered to be blocked? Explain your answer.
SDN: Mr. X owns 50% of Company A (red box). Company A owns 40% of Company B and Mr. X owns 10% of Company B. Because Company B is own by and SDN 10% and 40% from a Company that is owned by an SDN.
All companies are sanctioned.
Your customer is a stable, well-known, local company, with no high-risk customers. They do, however, have one foreign branch located in the UK. How would you place this customer on the financial risk matrix?
A. High risk B. Moderate risk C. Low risk
B. Moderate Risk (based on the matrix of associated risk w/particular types of transactions and customers FIs can use to evaluate their sanctions compliance systems)
What is Fuzzy Matching?
A. When the information screened is relatively broad or generic
B. When the information being screened is a false positive match
C. When the information being screened is not identical, but is a close match
C. When the information being screened is not identical, but is a close match
You are the sanctions officer for U.S. company – American Goods, which decides to implement a sanctions screening system. American Goods deals mostly with local customers, but sometimes has customers from France and the Netherlands as well. As there are a lot of transactions on a daily basis, you decide that new customers will be batch screened. Potential matches will be dealt with using the “four eyes principle”. Audits of the system will be conducted yearly.
1. What lists should you include in your screening? 2. What are some ways your screening could be improved?
- EU/UN/UK/OFAC, Local Lists, Internal Lists (Bad guys/grey list)
- Real Time Screening, transaction screening, Four Eye Principle, Audits, Testing of the system
You are the sanctions compliance officer at a bank and your review team has escalated a positive “true hit” to you involving a new customer account. They have already moved the funds on deposit into a blocked account and now want to know what to do next.
Walk them through it –
1. What to do if you are a US bank based in the US? 2. What to do if you are a European bank based in Europe? 3. What to do if you are U.S. manufacturing company?
1 – Determine what list, look at internal procedures, clarify who has the authority to freeze funds, place funds in an interest-bearing account, hold funds, and report transactions to OFAC within 10 days.
2 – Same as above but reporting is done to the National Authority
3 – Physically sequester/freeze and follow the same process above
Which if the following is NOT true about an OFAC Specific License:
A. It is focused and tailored to certain needs
B. It is usually included in Subpart E of the sanctions regulation
C. It usually identifies all the parties to the license.
B. It is usually included in Subpart E of the sanctions regulation
Note: A &C would be correct if it were “True”.
Which of the following elements will OFAC consider when assessing a penalty?
A. Strength of your sanctions compliance program B. Willful behavior C. Volume of transactions D. All of the above and more
D. All of the above and more
You are the general counsel at an aerospace company in Virginia, USA. You are conducting a review of the compliance program and you find a violation of ITAR in your business. You dig deeper and find out it was a willful violation. Which agencies do you VSD to?
Department of State (DDTC), DOJ, Check to see if anything in the transactions would cause reporting for BIS (export) and OFAC (sanction)
You are the OFAC Officer in a U.S. bank and have been passed on the following three transactions that your team has deemed suspicious.
Do you agree that these transactions suspicious? Which ones and why?
1) This transaction documentation lists the name “Slick Bank” in the customer name field. It is also missing the date of birth and full address of the customer.
2) This transaction involves a cover payment with standard MT202-COV message from a customer in Cuba.
3) This resubmitted transaction has an identical amount to the previous payment that was rejected, but the names of the parties are still the same.
1 – Suspicious – Bank name in customer field
2 – Sounds like it’s prohibited – need to verify – could be suspicious
3 – Possibly Suspicious – why did we reject it the 1st time around
What is Stripping?
A. The automatic act of deleting or changing information from payment messages.
B. The deliberate act of deleting or changing information from payment messages.
C. The coerced act of deleting or changing information from payment messages.
B. The deliberate act of deleting or changing information from payment messages.
Why does Homeland Security investigate most criminal penalties related to OFAC?
True or False: OFAC regulations require a robust compliance program from all US Companies?
A. True B. False
B. False
True or False: notwithstanding what is or isn’t in OFAC regulations, prudential regulators expect to see an OFAC risk assessment when they come to exam your company.
A. True B. False
A. True
