Regulatory Frameworks and Legal Compliance Flashcards

The USA PATRIOT Act expanded anti-money laundering requirements under the Bank Secrecy Act by requiring financial institutions to:

Answer: Establish customer identification programs (CIP) and perform due diligence on foreign correspondent accounts

The PATRIOT Act added CIP requirements (Section 326) and enhanced due diligence requirements for foreign correspondent and private banking accounts to combat terrorist financing.

Under Sarbanes-Oxley Section 404, management must assess the effectiveness of the company's internal controls over financial reporting as of the end of each fiscal year. This assessment must be:

Answer: Attested to by the company's external auditor

SOX Section 404(b) requires that the company's registered public accounting firm attest to and report on management's internal control assessment.

Which enforcement theory holds that senior executives can face personal criminal liability for regulatory violations committed by their subordinates, even without their direct knowledge, if they had the power to prevent the violations?

Answer: The Park Doctrine (responsible corporate officer doctrine)

The Park Doctrine, established in United States v. Park (1975), allows prosecution of corporate officers for violations by subordinates when the officer had authority and responsibility to prevent them.

Which of the following best describes a 'consent decree' in the context of regulatory enforcement?

Answer: A negotiated settlement agreement between a regulator and a company that is entered as a court order

A consent decree is a negotiated resolution between a government agency and a regulated entity that is formalized as a court order, giving the court authority to enforce compliance.

The concept of 'regulatory equivalence' is most relevant when a company is:

Answer: Seeking recognition that a foreign regulatory regime provides protections comparable to home-country requirements

Regulatory equivalence is a determination that a foreign jurisdiction's regulatory framework provides substantially the same protections as the home jurisdiction, often enabling mutual recognition.

The OFAC Specially Designated Nationals (SDN) list is primarily used in compliance programs to:

Answer: Screen parties to transactions for sanctions exposure before proceeding

OFAC's SDN list identifies individuals, entities, and countries subject to U.S. economic sanctions, and compliance programs must screen transactions against it to avoid prohibited dealings.

Under the Clean Air Act's Title V operating permit program, a 'major source' triggering permit requirements is generally defined as a facility emitting:

Answer: 100 tons per year or more of any regulated pollutant (or lower thresholds in non-attainment areas)

Title V generally covers major sources emitting 100 tons/year or more of regulated pollutants, with lower thresholds applicable in areas not meeting air quality standards.