Global Sanctions Compliance Flashcards
6 cards from real ACAMS practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Global Sanctions Compliance flashcards as text
What is OFAC's 'Specially Designated Nationals and Blocked Persons' (SDN) list and what obligations does it create?
Answer: A list maintained by the U.S. Treasury of individuals, entities, and countries subject to U.S. economic sanctions; financial institutions must block transactions and freeze assets of listed parties
The OFAC SDN list identifies persons, entities, and countries subject to U.S. economic sanctions. Financial institutions must block (freeze) property of SDNs and reject or block transactions involving SDN parties, reporting blocked or rejected transactions to OFAC.
What is OFAC's '50% Rule' and why is it significant for sanctions compliance?
Answer: Any entity that is 50% or more owned (directly or indirectly) by one or more SDNs is itself considered blocked, even if the entity is not explicitly listed on the SDN list
The OFAC 50% Rule extends sanctions to entities owned 50% or more by SDNs even if those entities do not appear on the SDN list. This prevents SDNs from evading sanctions by operating through nominally separate entities they control.
What is the difference between 'primary sanctions' and 'secondary sanctions' in the U.S. sanctions framework?
Answer: Primary sanctions apply to U.S. persons and transactions in U.S. jurisdiction; secondary sanctions target non-U.S. persons conducting significant transactions with sanctioned parties even without U.S. nexus
Primary sanctions prohibit U.S. persons and U.S.-nexus transactions from dealing with sanctioned parties. Secondary sanctions target non-U.S. persons who conduct significant business with sanctioned countries or entities, threatening them with exclusion from the U.S. financial system.
What is a 'voluntary self-disclosure' to OFAC and why might an institution choose to make one?
Answer: A proactive disclosure to OFAC by an institution that discovers it may have violated sanctions regulations, before OFAC initiates an enforcement action, which can significantly reduce civil penalties
Voluntary self-disclosure to OFAC is a proactive step an institution takes when it discovers a potential sanctions violation. OFAC treats VSD as a significant mitigating factor and typically reduces civil penalties by 50% for fully cooperative self-disclosures.
How do UN Security Council sanctions differ from OFAC sanctions?
Answer: UN sanctions are legally binding on all UN member states; OFAC sanctions are binding only on U.S. persons
UN Security Council sanctions resolutions (under Chapter VII of the UN Charter) are legally binding on all 193 UN member states, creating universal obligations. OFAC sanctions, while among the most extensive in the world, are U.S. law and primarily binding on U.S. persons.
What is 'sanctions evasion' and what are three common methods used to evade U.S. sanctions?
Answer: Illegal attempts to circumvent sanctions prohibitions; common methods include using front companies, falsifying transaction records, and routing transactions through non-U.S. financial institutions
Sanctions evasion involves illegal actions to circumvent sanctions prohibitions, including: using front companies to obscure the sanctioned party's involvement; falsifying trade documents or transaction records; and using non-U.S. financial institutions to process transactions without U.S. dollar clearing.