CSS Enforcement Actions & Reporting Obligations 4

Question 1

Which of the following best describes 'disgorgement' as used in OFAC civil settlements?

Accepted Answer

Recovery of profits gained through sanctionable conduct

Answer

Disgorgement requires a violator to give up profits earned through the sanctions violation, preventing unjust enrichment and serving as a deterrent beyond the base civil penalty.

Question 2

A foreign bank with no U.S. branch processes a USD transaction through a U.S. correspondent bank on behalf of a sanctioned entity. Which party bears primary OFAC liability?

Accepted Answer

The U.S. correspondent bank, as it processed the transaction on U.S. soil

Answer

The U.S. correspondent bank bears primary OFAC liability because it is a U.S. person that processed a transaction involving a sanctioned party, regardless of the foreign originator's intent.

Question 3

Under OFAC's Economic Sanctions Enforcement Guidelines, which factor is considered an aggravating circumstance that can increase the base penalty?

Accepted Answer

The violation involved a significant commercial benefit to the violator

Answer

Commercial benefit — meaning the violator profited from the sanctions violation — is an aggravating factor under OFAC's enforcement guidelines that can increase the penalty above the base amount.

Question 4

What is the primary purpose of OFAC's 'cautionary letter' in the enforcement process?

Accepted Answer

To notify a party that OFAC is aware of potential violations but is taking no further action at this time

Answer

A cautionary letter informs the recipient that OFAC reviewed the matter and found no violation or chose not to pursue action, but puts the entity on notice that similar conduct may be scrutinized more closely.

Question 5

When a U.S. financial institution rejects (rather than blocks) a transaction involving a sanctions concern, what filing is required and to whom?

Accepted Answer

A rejected transaction report to OFAC within 10 business days

Answer

Rejected transactions — those not processed because they involve a sanctions concern but do not involve blockable property — must be reported to OFAC within 10 business days of rejection.

(CSS) Certified Sanctions Specialist Practice Test

(CSS) Certified Sanctions Specialist Practice Test

CSS Enforcement Actions & Reporting Obligations 4