Legal & Ethical Compliance Standards Flashcards

A compliance officer is conducting a risk assessment and discovers that a business unit has never been audited despite operating in a high-risk jurisdiction. The appropriate response is to:

Answer: Escalate immediately and prioritize the unit for an expedited audit

An unaudited high-risk operation represents a significant compliance gap that should be escalated and prioritized for immediate review rather than deferred.

Under U.S. export control regulations (EAR), the 'deemed export' rule applies when:

Answer: Controlled technology is released to a foreign national within the United States

The deemed export rule treats the release of controlled technology to a foreign national within the U.S. as an export to that person's home country, requiring the same licensing.

Which element of the DOJ's evaluation framework for corporate compliance programs assesses whether the compliance program is 'adequately resourced and empowered to function effectively'?

Answer: Autonomy and resources of the compliance function

The DOJ's Evaluation of Corporate Compliance Programs guidance explicitly asks whether the compliance function has sufficient resources, autonomy, and authority to be effective.

A company's supplier is found to be using forced labor in its manufacturing process. Under U.S. Customs law (19 U.S.C. § 1307), the legal consequence is:

Answer: Prohibition on importing goods made with forced labor

Section 307 of the Tariff Act of 1930 prohibits the importation of goods produced with forced or indentured labor, and CBP can issue withhold-release orders against such goods.

In conducting an internal investigation, attorney-client privilege protections are most at risk when:

Answer: The investigation is conducted by compliance staff without attorney direction

Privilege is most at risk when investigations are led by non-attorneys without attorney oversight, as business-purpose rather than legal-advice purpose can defeat the privilege.

The concept of 'proportionality' in sanctions compliance means that:

Answer: The compliance measures applied should be commensurate with the level of risk identified

Proportionality in compliance means allocating resources and controls in a manner that matches the level of risk, rather than applying uniform measures across all areas.

Which of the following scenarios most clearly constitutes market manipulation under U.S. securities law?

Answer: A trader executes a series of wash sales to create the appearance of active trading volume

Wash sales—simultaneous buy and sell orders to create artificial trading volume—are a classic form of market manipulation prohibited by Section 9 of the Securities Exchange Act.