CSS CSS Financial Institution Obligations & Controls

Question 1

Which U.S. regulatory expectation requires financial institutions to implement a risk-based sanctions compliance program?

Accepted Answer

OFAC's Framework for OFAC Compliance Commitments (2019)

Answer

FinCEN's Customer Identification Program rule only

Answer

The Bank Secrecy Act AML program requirement

Answer

The Dodd-Frank Act compliance program mandate

Question 2

Under OFAC's Compliance Commitments Framework, which element focuses on ensuring senior management understands and supports sanctions compliance?

Accepted Answer

Management Commitment

Answer

Internal Controls

Answer

Testing and Auditing

Answer

Training

Question 3

A financial institution's sanctions compliance officer discovers that its automated screening system has a known deficiency allowing certain SDN names to go unmatched. The appropriate response is to:

Accepted Answer

Immediately remediate the deficiency or implement compensating controls while remediation is underway

Answer

Document the deficiency and wait for the next scheduled system upgrade

Answer

Notify OFAC first before taking any internal corrective action

Answer

Reduce screening frequency until the deficiency is corrected

Question 4

Which financial institution activity is most commonly cited in OFAC enforcement actions involving wire transfers?

Accepted Answer

Stripping or omitting sanctions-relevant information from payment messages

Answer

Failure to file Currency Transaction Reports

Answer

Accepting deposits from foreign banks without KYC

Answer

Failing to screen correspondent banks for AML risk

Question 5

What is the significance of a 'U-turn' transaction in sanctions compliance for financial institutions?

Accepted Answer

It is a specific general license allowing certain dollar-clearing transactions involving otherwise sanctioned countries to transit U.S. correspondent banks under defined conditions

Answer

It refers to a transaction that is reversed after a false positive screening hit

Answer

It is an OFAC term for circular payment schemes used in evasion

Answer

It describes transactions that are voluntarily unwound by a financial institution post-blocking

Question 6

When a financial institution rejects (rather than blocks) a transaction involving a sanctions concern, it typically means:

Accepted Answer

The transaction involved a country-level prohibition where no property interest is created, so blocking is not required

Answer

The transaction was processed in error and reversed

Answer

The institution filed a SAR and returned funds with OFAC notification

Answer

The customer requested cancellation before sanctions screening was complete