CSS Screening Processes & Compliance Systems 3

Question 1

Under OFAC regulations, what is the difference between a 'blocked' transaction and a 'rejected' transaction?

Accepted Answer

Blocked transactions involve SDNs and funds are frozen; rejected transactions involve prohibited countries and are returned to sender

Answer

OFAC distinguishes between blocking (freezing funds of SDNs) and rejecting (returning transactions involving sanctioned jurisdictions where no property interest exists).

Question 2

A compliance officer discovers that their screening system has not been updated with the latest OFAC SDN list for 45 days due to a technical failure. What is the PRIMARY risk this creates?

Accepted Answer

The institution may have processed transactions with newly designated persons without detection

Answer

A stale sanctions list means newly designated individuals or entities may have transacted undetected, creating potential OFAC violations and enforcement exposure.

Question 3

What is 'straight-through processing' (STP) in the context of sanctions screening?

Accepted Answer

A method where transactions that clear screening automatically process without human intervention

Answer

STP allows transactions that do not generate alerts to pass through automatically, reserving human review only for flagged items to improve operational efficiency.

Question 4

Which scenario best illustrates a 'false positive' in sanctions screening?

Accepted Answer

A transaction by a legitimate customer with a name similar to an SDN that is flagged but ultimately cleared after review

Answer

A false positive occurs when a legitimate, non-sanctioned individual triggers an alert due to a name similarity with a listed person, requiring analyst review before clearance.

Question 5

What is the significance of SWIFT's Sanctions Screening service for correspondent banks?

Accepted Answer

It provides a centralized screening service that checks messages against major sanctions lists before transmission

Answer

SWIFT's Sanctions Screening service checks financial messages against multiple watchlists before or after transmission, helping banks identify potential sanctions hits in payment traffic.

(CSS) Certified Sanctions Specialist Practice Test

(CSS) Certified Sanctions Specialist Practice Test

CSS Screening Processes & Compliance Systems 3