CSS Secondary Sanctions & Extraterritorial Reach 2

Question 1

The Global Magnitsky Human Rights Accountability Act authorizes U.S. sanctions against foreign persons for which of the following?

Accepted Answer

Significant corruption or gross violations of internationally recognized human rights

Answer

Violations of U.S. export control laws

Answer

Providing material support to designated terrorist organizations

Answer

Engaging in nuclear proliferation activities

Question 2

Which statute serves as the primary legal authority for presidential imposition of secondary sanctions through executive orders?

Accepted Answer

The International Emergency Economic Powers Act (IEEPA)

Answer

The Export Administration Act (EAA)

Answer

The Trading with the Enemy Act (TWEA)

Answer

The Foreign Corrupt Practices Act (FCPA)

Question 3

'De-risking' by foreign financial institutions in response to secondary sanctions concerns typically involves which behavior?

Accepted Answer

Terminating relationships with entire jurisdictions or customer segments to avoid any sanctions exposure

Answer

Filing suspicious activity reports for all cross-border transactions

Answer

Implementing enhanced due diligence for every individual client

Answer

Obtaining OFAC general licenses for all high-risk transactions

Question 4

Under the Comprehensive Iran Sanctions, Accountability, and Divestiture Act (CISADA), which activity by a foreign bank can result in loss of its U.S. correspondent account?

Accepted Answer

Knowingly facilitating significant financial transactions on behalf of the IRGC or designated Iranian parties

Answer

Operating a branch office inside Iran without disclosure to regulators

Answer

Holding Iranian government bonds in its investment portfolio

Answer

Employing Iranian nationals in its compliance department

Question 5

Which of the following is NOT typically a factor OFAC considers when determining whether a transaction is 'significant' for secondary sanctions purposes?

Accepted Answer

The nationality of the individual employees processing the transaction

Answer

The size and volume of the transaction

Answer

The nature of the transaction and its connection to sanctioned activity

Answer

The impact on U.S. national security or foreign policy objectives

Question 6

A non-U.S. company that knowingly facilitates a 'significant' transaction for a party designated under North Korea-related secondary sanctions may face which of the following consequences?

Accepted Answer

Loss of access to U.S. markets and potential designation on the SDN List

Answer

Automatic referral to the UN Security Council with no direct U.S. action

Answer

A mandatory operational audit by OFAC at its foreign headquarters

Answer

Criminal prosecution in U.S. courts as the sole available remedy

Question 7

What is the primary purpose of OFAC's 'significant transaction' standard in secondary sanctions enforcement?

Accepted Answer

To distinguish sanctionable foreign conduct from routine commercial activity that does not warrant sanctions

Answer

To identify all transactions that must be reported to FinCEN

Answer

To calculate the appropriate civil monetary penalty for violations

Answer

To determine whether a voluntary self-disclosure is required from a U.S. person