ACAMS Global Sanctions Compliance 2

Question 1

What is OFAC's 'Specially Designated Nationals and Blocked Persons' (SDN) list and what obligations does it create?

Accepted Answer

A list maintained by the U.S. Treasury of individuals, entities, and countries subject to U.S. economic sanctions; financial institutions must block transactions and freeze assets of listed parties

Answer

The OFAC SDN list identifies persons, entities, and countries subject to U.S. economic sanctions. Financial institutions must block (freeze) property of SDNs and reject or block transactions involving SDN parties, reporting blocked or rejected transactions to OFAC.

Question 2

What is OFAC's '50% Rule' and why is it significant for sanctions compliance?

Accepted Answer

Any entity that is 50% or more owned (directly or indirectly) by one or more SDNs is itself considered blocked, even if the entity is not explicitly listed on the SDN list

Answer

The OFAC 50% Rule extends sanctions to entities owned 50% or more by SDNs even if those entities do not appear on the SDN list. This prevents SDNs from evading sanctions by operating through nominally separate entities they control.

Question 3

What is the difference between 'primary sanctions' and 'secondary sanctions' in the U.S. sanctions framework?

Accepted Answer

Primary sanctions apply to U.S. persons and transactions in U.S. jurisdiction; secondary sanctions target non-U.S. persons conducting significant transactions with sanctioned parties even without U.S. nexus

Answer

Primary sanctions prohibit U.S. persons and U.S.-nexus transactions from dealing with sanctioned parties. Secondary sanctions target non-U.S. persons who conduct significant business with sanctioned countries or entities, threatening them with exclusion from the U.S. financial system.

Question 4

What is a 'voluntary self-disclosure' to OFAC and why might an institution choose to make one?

Accepted Answer

A proactive disclosure to OFAC by an institution that discovers it may have violated sanctions regulations, before OFAC initiates an enforcement action, which can significantly reduce civil penalties

Answer

Voluntary self-disclosure to OFAC is a proactive step an institution takes when it discovers a potential sanctions violation. OFAC treats VSD as a significant mitigating factor and typically reduces civil penalties by 50% for fully cooperative self-disclosures.

Question 5

How do UN Security Council sanctions differ from OFAC sanctions?

Accepted Answer

UN sanctions are legally binding on all UN member states; OFAC sanctions are binding only on U.S. persons

Answer

UN Security Council sanctions resolutions (under Chapter VII of the UN Charter) are legally binding on all 193 UN member states, creating universal obligations. OFAC sanctions, while among the most extensive in the world, are U.S. law and primarily binding on U.S. persons.

(ACAMS) Association of Certified Anti-Money Laundering Specialists Practice Test

(ACAMS) Association of Certified Anti-Money Laundering Specialists Practice Test

ACAMS Global Sanctions Compliance 2