CSS CSS Financial Institution Obligations & Controls 3

Question 1

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

Accepted Answer

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

Answer

The annual report covers only newly blocked property; the 10-day report covers all property

Answer

The annual report is filed with FinCEN; the 10-day report goes to OFAC

Answer

There is no difference — they are the same report filed at different intervals

Question 2

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

Accepted Answer

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

Answer

Satisfies OFAC's blocking report requirement

Answer

Must also notify the sanctioned party of the SAR filing

Answer

Must close the account within 30 days of SAR filing

Question 3

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

Accepted Answer

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

Answer

Annual sanctions training for all employees

Answer

Quarterly sanctions list refresh

Answer

Manual review of all cross-border transactions by a compliance officer

Question 4

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

Accepted Answer

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

Answer

Treat the error as a non-event since it was unintentional

Answer

Notify the Federal Reserve and wait for instructions

Answer

Reverse the transaction through its normal payment reversal process

Question 5

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

Accepted Answer

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

Answer

The dollar threshold at which OFAC enforcement becomes likely

Answer

The minimum number of screening systems an institution must deploy

Answer

FinCEN's determination of acceptable compliance shortfalls

Question 6

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

Accepted Answer

OFAC Insurance Industry Guidance (2004, updated periodically)

Answer

FinCEN Insurance SAR guidance

Answer

State insurance commissioner sanctions directives

Answer

NAIC Model Sanctions Compliance Act