CSS CSS Sanctions Evasion Techniques & Red Flags

Question 1

Which technique involves a sanctioned party using multiple shell companies in non-sanctioned jurisdictions to disguise ultimate beneficial ownership?

Accepted Answer

Layering through corporate opacity

Answer

Structuring

Answer

Smurfing

Answer

Round-tripping

Question 2

What is 'AIS manipulation' (also known as 'AIS spoofing') and why is it a sanctions red flag?

Accepted Answer

Deliberately transmitting false location data or disabling a vessel's AIS transponder to conceal a vessel's true location or port calls

Answer

Using AIS data to file false vessel insurance claims

Answer

Hacking AIS systems to alter cargo manifests

Answer

Using AIS data to misrepresent a vessel's flag state

Question 3

The use of cryptocurrency in sanctions evasion primarily creates compliance challenges because:

Accepted Answer

Crypto transactions can obscure the identity of parties, enabling sanctioned actors to move value while evading traditional financial screening

Answer

Cryptocurrency transactions always involve U.S.-regulated entities

Answer

All crypto assets are automatically classified as blocked property

Answer

Cryptocurrency is not subject to OFAC jurisdiction

Question 4

A 'loan-back' scheme in the context of sanctions evasion typically involves:

Accepted Answer

A sanctioned party depositing funds in a friendly bank and then borrowing against those funds to access clean money

Answer

A financial institution extending credit to a sanctioned country's central bank

Answer

A company taking out a loan to pay OFAC penalties

Answer

Using Eurobond markets to refinance sanctioned government debt

Question 5

Which jurisdictional characteristic makes certain offshore financial centers (OFCs) particularly high-risk from a sanctions evasion perspective?

Accepted Answer

Limited beneficial ownership disclosure requirements, making it difficult to identify the true owners of entities registered there

Answer

High corporate tax rates that attract large multinational corporations

Answer

Strong anti-money laundering regulations that are poorly enforced

Answer

Geographic proximity to sanctioned countries

Question 6

A compliance officer notes that a customer's wire transfer lists a 'correspondent account' as the beneficiary rather than a named individual or company. This is a red flag because:

Accepted Answer

Using correspondent accounts as final beneficiaries can obscure the ultimate recipient and prevent effective sanctions screening

Answer

Correspondent accounts are always associated with sanctioned banks

Answer

SWIFT prohibits using correspondent account references in MT103 messages

Answer

This format is only permitted for interbank settlements, not commercial payments