CAMS Sanctions and OFAC Compliance 1

Question 1

What is the Office of Foreign Assets Control (OFAC) and what is its primary function?

Accepted Answer

A U.S. Treasury office that administers and enforces economic and trade sanctions against targeted foreign countries, entities, and individuals

Answer

OFAC is a Treasury Department office that administers U.S. sanctions programs against foreign governments, entities, and individuals, prohibiting U.S. persons and institutions from engaging in transactions with sanctioned parties.

Question 2

What is the Specially Designated Nationals (SDN) list maintained by OFAC?

Accepted Answer

A list of individuals, entities, and countries with whom U.S. persons and institutions are prohibited from conducting business

Answer

The SDN list identifies individuals, companies, and countries subject to U.S. sanctions, whose assets must be blocked and with whom U.S. persons may not conduct transactions without OFAC authorization.

Question 3

What is 'blocking' in the context of OFAC sanctions compliance?

Accepted Answer

Freezing and segregating funds or assets of a sanctioned party pending further OFAC guidance

Answer

When a financial institution identifies a transaction or account involving a sanctioned party, it must 'block' (freeze) the funds, report to OFAC within 10 business days, and hold the funds in a segregated interest-bearing account.

Question 4

A U.S. bank receives a wire transfer from a foreign bank in which 51% is owned by a sanctioned entity. Under OFAC's '50 percent rule,' should this transaction be blocked?

Accepted Answer

Yes, because any entity 50% or more owned (directly or indirectly) by an SDN is itself treated as sanctioned, even if not explicitly listed

Answer

OFAC's 50 Percent Rule provides that any entity owned 50% or more (directly or indirectly) by a sanctioned party is treated as sanctioned itself, even if not explicitly named on the SDN list.

Question 5

What does OFAC's 'license' process allow?

Accepted Answer

It grants specific authorization for transactions that would otherwise be prohibited under sanctions programs

Answer

An OFAC license is a specific authorization to engage in a transaction that would otherwise be prohibited, available either as a general license (broad authorization for certain categories) or specific license (case-by-case approval).

CAMS - Certified Anti-Money Laundering Specialist Certification Practice Test

CAMS - Certified Anti-Money Laundering Specialist Certification Practice Test

CAMS Sanctions and OFAC Compliance 1