Regulatory Frameworks Flashcards

A company discovers it unknowingly violated an OFAC sanction by processing a payment involving a Specially Designated National (SDN). Which is the MOST appropriate immediate first step?

Answer: Block the transaction or property if possible and conduct an initial internal review

OFAC regulations require blocking or rejecting prohibited transactions, and companies should immediately contain the violation and conduct an internal review before determining disclosure obligations.

The EU's Market Abuse Regulation (MAR) is primarily designed to address which compliance risk?

Answer: Insider trading and market manipulation in financial markets

MAR establishes a harmonized EU framework prohibiting insider dealing, unlawful disclosure of inside information, and market manipulation.

Under the U.S. Federal Sentencing Guidelines for Organizations (FSGO), which factor can INCREASE the culpability multiplier applied to a fine?

Answer: Prior history of similar misconduct within the past 10 years

Under the FSGO, prior similar conduct within 10 years is an aggravating factor that increases the culpability score and therefore the potential fine multiplier.

Which of the following statements about the Gramm-Leach-Bliley Act (GLBA) Safeguards Rule is CORRECT?

Answer: It requires financial institutions to develop a written information security program

The GLBA Safeguards Rule requires financial institutions to develop, implement, and maintain a comprehensive written information security program to protect customer financial information.

The concept of 'regulatory capture' describes which phenomenon?

Answer: A regulatory agency advancing the interests of the industry it oversees rather than the public

Regulatory capture occurs when a regulatory agency becomes dominated by the industry it is charged with regulating, acting in the industry's interest rather than the public interest.

Under the UK Bribery Act 2010, Section 7 creates a corporate offense for failing to prevent bribery. What is the ONLY available defense against this charge?

Answer: Proving that the organization had adequate procedures in place to prevent bribery

The only defense to the Section 7 failure-to-prevent offense is demonstrating that the organization had 'adequate procedures' in place designed to prevent bribery by associated persons.

A multinational company's subsidiary in a high-corruption-risk country makes small payments to local officials to expedite routine permit approvals. Under the FCPA, these payments may qualify as which exception?

Answer: Facilitation payments exception for routine governmental actions

The FCPA contains a narrow exception for 'facilitating payments' made to expedite routine, non-discretionary governmental actions such as processing permits or utility connections.