CCCP Regulatory Compliance & Legal Frameworks 2 — Questions and Answers
Question 1: Under the Foreign Corrupt Practices Act (FCPA), which category of payments is explicitly exempted from the anti-bribery provisions?
- Payments to foreign government officials to secure contracts
- Facilitating payments to expedite routine non-discretionary government actions (Correct answer)
- Payments disguised as consulting fees to foreign agents
- Gifts exceeding $250 given to foreign officials
Correct answer: Facilitating payments to expedite routine non-discretionary government actions
The FCPA contains a narrow exemption for 'facilitating payments' made to expedite or secure the performance of routine, non-discretionary government actions such as processing permits or providing utilities.
Question 2: A company discovers that its subsidiary in another country has been making undocumented cash payments to local officials. Under the FCPA's books-and-records provision, what is the primary obligation?
- Report the subsidiary's conduct to local law enforcement immediately
- Ensure the payments are accurately recorded in the company's books and records (Correct answer)
- Terminate the subsidiary's management without investigation
- Seek a voluntary disclosure agreement with the DOJ before recording any transactions
Correct answer: Ensure the payments are accurately recorded in the company's books and records
The FCPA's accounting provisions require issuers to maintain books and records that accurately and fairly reflect all transactions, including improper payments by subsidiaries.
Question 3: Which regulatory body has primary enforcement authority over the books-and-records provisions of the FCPA?
- Department of Justice (DOJ)
- Securities and Exchange Commission (SEC) (Correct answer)
- Federal Trade Commission (FTC)
- Office of Foreign Assets Control (OFAC)
Correct answer: Securities and Exchange Commission (SEC)
The SEC enforces the FCPA's accounting provisions against issuers (public companies), while the DOJ enforces the anti-bribery provisions against both issuers and domestic concerns.
Question 4: Under the Dodd-Frank Act's whistleblower program, what is the eligible award range for a whistleblower whose original information leads to an SEC enforcement action exceeding $1 million in sanctions?
- 5% to 15% of sanctions collected
- 10% to 30% of sanctions collected (Correct answer)
- 15% to 25% of sanctions collected
- 20% to 40% of sanctions collected
Correct answer: 10% to 30% of sanctions collected
Dodd-Frank's whistleblower program awards eligible individuals 10% to 30% of monetary sanctions exceeding $1 million collected by the SEC based on their original information.
Question 5: A compliance officer discovers that the company's AML program has a significant gap in its customer due diligence procedures. Under FinCEN's CDD Rule, which customer type requires the highest level of beneficial ownership verification?
- Sole proprietorships with annual revenue under $500,000
- Legal entity customers such as corporations and LLCs (Correct answer)
- Individual retail customers with standard accounts
- Non-profit organizations registered in the US
Correct answer: Legal entity customers such as corporations and LLCs
FinCEN's CDD Rule requires financial institutions to identify and verify the beneficial owners of legal entity customers (those owning 25% or more and one individual with significant control).
Question 6: The EU General Data Protection Regulation (GDPR) applies to a US-based company that has no physical presence in Europe. Under what circumstance would the GDPR still apply to this company?
- If the company employs more than 250 people globally
- If the company processes personal data of EU residents in connection with offering goods or services to them (Correct answer)
- If the company's website is accessible from EU countries
- If the company uses cloud servers located within EU borders
Correct answer: If the company processes personal data of EU residents in connection with offering goods or services to them
GDPR's extraterritorial scope (Article 3) applies when a non-EU company offers goods or services to, or monitors the behavior of, individuals in the EU, regardless of physical presence.
Question 7: Under the Sarbanes-Oxley Act Section 301, audit committees of public companies must establish procedures for which of the following?
- Setting executive compensation packages
- Receiving and handling complaints regarding accounting and internal controls (Correct answer)
- Approving mergers and acquisitions above $50 million
- Conducting annual performance reviews of the external auditor
Correct answer: Receiving and handling complaints regarding accounting and internal controls
SOX Section 301 requires audit committees to establish confidential, anonymous procedures for employees to submit concerns about questionable accounting or auditing matters.
CCCP Regulatory Compliance & Legal Frameworks 2
Under the Foreign Corrupt Practices Act (FCPA), which category of payments is explicitly exempted from the anti-bribery provisions?