CSS Financial Institution Obligations & Controls Flashcards

What is the primary difference between an OFAC 'Annual Report of Blocked Property' and the initial 10-day blocking report?

Answer: The annual report provides an aggregate inventory of all currently blocked property held as of June 30 each year

OFAC requires an Annual Report of Blocked Property (filed by September 30 for property held as of June 30) summarizing all blocked property held, supplementing the initial transaction-specific 10-day blocking reports.

Under the Bank Secrecy Act and OFAC's framework, when a financial institution files a SAR related to a sanctions concern, it:

Answer: Does not satisfy OFAC's blocking or reporting requirement — both obligations may apply independently

SAR filing under BSA/AML and OFAC blocking/reporting are separate, independent obligations — a SAR does not substitute for OFAC's required blocking report, and both may need to be filed.

Which internal control is most effective for preventing an institution from processing payments to newly designated SDNs shortly after a designation is announced?

Answer: Real-time or same-day updates to the institution's screening lists and system triggers

OFAC can designate parties at any time, and the SDN List can be updated daily — financial institutions must update screening systems in near real-time (same day) to avoid processing prohibited transactions immediately after a new designation.

A financial institution that discovers it processed a transaction involving a sanctioned party due to a software error should primarily:

Answer: Document the root cause, block any remaining property, remediate the system error, and consider voluntary self-disclosure to OFAC

Even inadvertent violations require prompt action: identifying and blocking remaining property, fixing the root cause, and evaluating voluntary self-disclosure — which OFAC treats as a significant mitigating factor.

The concept of 'risk appetite' in a financial institution's sanctions compliance program refers to:

Answer: Management's defined tolerance for sanctions risk across different products, customers, and geographies

Risk appetite defines how much sanctions-related risk an institution's management is willing to accept, guiding decisions on which products to offer, which jurisdictions to serve, and what controls to implement.

Which OFAC program guidance specifically addresses the sanctions compliance obligations of the insurance sector?

Answer: OFAC Insurance Industry Guidance (2004, updated periodically)

OFAC has published specific guidance for the insurance industry (including brokers, agents, and underwriters) outlining how sanctions obligations apply to insurance products such as policies, claims, and reinsurance.