CSS Risk Analysis & Due Diligence 2

Question 1

A compliance officer discovers that a new corporate client's beneficial owner holds a 15% stake in a company on the SDN list. What is the most appropriate immediate action?

Accepted Answer

Escalate to senior management and place the account on hold pending review

Answer

When a beneficial owner has connections to an SDN-listed entity, the account should be held and escalated for senior review before any decision is made.

Question 2

Which of the following best defines 'ownership and control' under OFAC's 50 Percent Rule?

Accepted Answer

Any entity owned 50% or more, directly or indirectly, by one or more SDN-listed persons

Answer

OFAC's 50 Percent Rule blocks any entity owned 50% or more in aggregate by one or more SDN-listed persons, even if the entity itself is not listed.

Question 3

During enhanced due diligence on a correspondent bank, you identify that the bank operates in a jurisdiction with weak AML controls. Which risk factor is MOST relevant to sanctions exposure?

Accepted Answer

The volume of nested correspondent relationships the bank maintains

Answer

Nested correspondent relationships can obscure the true originator of transactions, creating significant sanctions evasion risk.

Question 4

A sanctions risk assessment for a money services business (MSB) should prioritize which of the following customer risk factors?

Accepted Answer

Customer's geographic reach into high-risk jurisdictions

Answer

Geographic reach into high-risk or sanctioned jurisdictions is a primary customer risk factor for MSBs given the nature of cross-border money transfers.

Question 5

What is the purpose of a 'risk-based approach' in sanctions compliance?

Accepted Answer

To allocate compliance resources proportionally to the level of identified sanctions risk

Answer

A risk-based approach directs enhanced scrutiny and resources toward higher-risk customers, products, and geographies rather than applying uniform controls.

(CSS) Certified Sanctions Specialist Practice Test

(CSS) Certified Sanctions Specialist Practice Test

CSS Risk Analysis & Due Diligence 2