CAMS Sanctions and OFAC Compliance 2

Question 1

What is the difference between 'primary sanctions' and 'secondary sanctions'?

Accepted Answer

Primary sanctions prohibit U.S. persons from transacting with sanctioned parties; secondary sanctions target non-U.S. persons who facilitate transactions with sanctioned parties

Answer

Primary sanctions apply to the most dangerous sanctioned parties; secondary sanctions apply to lesser threats

Answer

Primary sanctions are enforced by OFAC; secondary sanctions are enforced by the FBI

Answer

Primary sanctions apply to individuals; secondary sanctions apply to corporate entities

Question 2

What is a 'rejected transaction' in OFAC compliance, and how does it differ from a 'blocked transaction'?

Accepted Answer

A rejected transaction is declined without holding funds (no U.S. nexus to block), typically involving a foreign party that is not subject to blocking; a blocked transaction involves U.S.-nexus funds that must be frozen and held

Answer

A rejected transaction is one declined due to insufficient funds; a blocked transaction is declined due to fraud

Answer

Rejected and blocked transactions are identical in OFAC compliance

Answer

A rejected transaction requires SAR filing; a blocked transaction does not

Question 3

Which of the following programs is NOT administered by OFAC?

Accepted Answer

USA PATRIOT Act Section 314(a) information sharing

Answer

Cuba sanctions (CACR)

Answer

Iran sanctions (ITSR)

Answer

Russia sanctions (CAPTA/Ukraine-related)

Question 4

What is a key difference between AML compliance and sanctions compliance at a financial institution?

Accepted Answer

AML compliance focuses on detecting and reporting suspicious transactions; sanctions compliance requires blocking or rejecting transactions with prohibited parties in real time

Answer

AML compliance has no monetary penalties; sanctions compliance does

Answer

AML applies only to domestic transactions; sanctions apply only to international transactions

Answer

There is no meaningful difference — they are the same compliance function

Question 5

What is the consequence for a financial institution that processes a prohibited OFAC transaction?

Accepted Answer

Civil monetary penalties up to the greater of $250,000 per violation or twice the amount of the transaction, plus potential criminal penalties

Answer

A verbal warning from OFAC for first-time violations

Answer

Only criminal penalties for senior executives but not the institution itself

Answer

Automatic license revocation with no opportunity for remediation

Question 6

What is 'sanctions evasion' and what are common techniques used?

Accepted Answer

Deliberately circumventing sanctions through techniques like falsifying trade documents, using front companies, routing transactions through non-sanctioned intermediaries, or obscuring the identity of sanctioned parties

Answer

Filing incorrect sanctions reports with OFAC due to system errors

Answer

Using compliance software that produces false negative results

Answer

Misidentifying sanctioned individuals due to name-matching errors