Enforcement Actions & Reporting Obligations Flashcards

Which enforcement mechanism allows OFAC to designate a foreign financial institution that knowingly facilitates significant transactions for sanctioned parties without placing that institution on the SDN List?

Answer: Correspondent Account or Payable-Through Account (CAPTA) designation

The CAPTA mechanism under Iran sanctions prohibits U.S. banks from opening or maintaining correspondent or payable-through accounts for designated foreign banks, effectively cutting them off from the U.S. financial system.

A deferred prosecution agreement (DPA) negotiated between a company and the DOJ for sanctions violations typically requires which ongoing obligation?

Answer: Appointment of an independent compliance monitor for the DPA term

DPAs commonly require the appointment of an independent compliance monitor who reports to DOJ on the company's remediation efforts and compliance program improvements throughout the agreement term.

What is the significance of the 'knowledge' element in U.S. criminal sanctions prosecutions under IEEPA?

Answer: Willfulness is required, meaning the defendant knew the conduct was unlawful

Criminal IEEPA violations require proof of willfulness — the government must show the defendant knew the conduct was unlawful — a higher standard than the strict liability applied in civil enforcement.

Under the Bank Secrecy Act, how does a financial institution's obligation to file a SAR interact with a simultaneous OFAC blocking obligation?

Answer: Both obligations are independent and may apply simultaneously to the same transaction

SAR filing under BSA and transaction blocking under OFAC are independent legal obligations that can both apply to the same transaction — blocking stops the funds while the SAR reports suspicious activity.

Which OFAC enforcement document publicly discloses the details of a completed civil settlement, including the facts, penalty amount, and mitigating factors considered?

Answer: A public enforcement action release posted on OFAC's website

OFAC publishes detailed public enforcement action releases on its website when civil penalties are settled, describing the facts, legal basis, mitigating/aggravating factors, and final penalty amount.

A U.S. company's compliance team discovers that a small payment to a vendor in a non-sanctioned country was ultimately benefiting a sanctioned person through a multi-layered ownership structure. What reporting obligation most likely applies?

Answer: Block any remaining exposure and report to OFAC within 10 business days

Transactions that indirectly benefit a sanctioned person trigger the same blocking and reporting obligations as direct transactions — the company must block remaining exposure and report to OFAC promptly.

When OFAC issues a 'pre-penalty notice,' what right does the recipient have before a final penalty is assessed?

Answer: The right to respond in writing and request a hearing within 30 days

Recipients of an OFAC pre-penalty notice have 30 days to submit a written response contesting the findings or proposing a settlement, providing due process before a final penalty is issued.