CAMS Sanctions and OFAC Compliance 2

Question 1

What is the difference between 'primary sanctions' and 'secondary sanctions'?

Accepted Answer

Primary sanctions prohibit U.S. persons from transacting with sanctioned parties; secondary sanctions target non-U.S. persons who facilitate transactions with sanctioned parties

Answer

Primary sanctions apply directly to U.S. persons and entities, while secondary sanctions extend U.S. penalties to non-U.S. persons who engage in significant transactions with sanctioned parties, effectively giving sanctions extraterritorial reach.

Question 2

What is a 'rejected transaction' in OFAC compliance, and how does it differ from a 'blocked transaction'?

Accepted Answer

A rejected transaction is declined without holding funds (no U.S. nexus to block), typically involving a foreign party that is not subject to blocking; a blocked transaction involves U.S.-nexus funds that must be frozen and held

Answer

Rejected transactions (also called prohibited transactions) are declined without holding the funds because there is no property interest that can be blocked (e.g., a foreign bank rejects a wire), while blocked transactions involve assets that must be frozen and held pending OFAC guidance.

Question 3

Which of the following programs is NOT administered by OFAC?

Accepted Answer

USA PATRIOT Act Section 314(a) information sharing

Answer

FinCEN administers the Section 314(a) information sharing program between financial institutions and law enforcement; OFAC administers sanctions programs against Cuba, Iran, Russia, and other targeted jurisdictions.

Question 4

What is a key difference between AML compliance and sanctions compliance at a financial institution?

Accepted Answer

AML compliance focuses on detecting and reporting suspicious transactions; sanctions compliance requires blocking or rejecting transactions with prohibited parties in real time

Answer

AML focuses on identifying and reporting suspicious activity to law enforcement; sanctions compliance requires real-time screening and immediate action (blocking/rejecting) when prohibited parties are identified, leaving no discretion.

Question 5

What is the consequence for a financial institution that processes a prohibited OFAC transaction?

Accepted Answer

Civil monetary penalties up to the greater of $250,000 per violation or twice the amount of the transaction, plus potential criminal penalties

Answer

OFAC can impose civil penalties up to the greater of $250,000 per violation or twice the transaction value, and willful violations can result in criminal penalties including imprisonment, though penalty amounts have increased significantly in recent years.

CAMS - Certified Anti-Money Laundering Specialist Certification Practice Test

CAMS - Certified Anti-Money Laundering Specialist Certification Practice Test

CAMS Sanctions and OFAC Compliance 2