CAMS Sanctions and OFAC Compliance 3

Question 1

What is a 'Consolidated Sanctions List' and where should compliance officers look to screen customers?

Accepted Answer

A compilation of multiple OFAC sanctions lists (SDN, SSI, FSE, etc.) plus other relevant lists like EU, UN, and UK sanctions, used for comprehensive screening

Answer

Comprehensive sanctions screening typically requires checking multiple lists including OFAC's SDN, Sectoral Sanctions Identifications (SSI), and Foreign Sanctions Evaders lists, as well as UN, EU, and UK consolidated sanctions lists for international transactions.

Question 2

What is 'correspondent banking' sanctions risk and how should banks manage it?

Accepted Answer

The risk that correspondent relationships will be used to process transactions on behalf of sanctioned parties who are customers of the respondent bank, managed through due diligence on the respondent bank's compliance program

Answer

In correspondent banking, U.S. banks process payments for the respondent bank's customers without direct visibility, creating risk that sanctioned parties will use the respondent as a conduit — managed by evaluating the respondent's AML/sanctions program quality.

Question 3

What must a financial institution do within 10 business days of identifying blocked property under OFAC regulations?

Accepted Answer

File a Blocked Property Report with OFAC

Answer

When a financial institution blocks property pursuant to OFAC sanctions, it must file a report with OFAC within 10 business days, providing details of the blocked transaction and the sanctions program involved.

Question 4

What is a 'general license' under OFAC sanctions programs?

Accepted Answer

A pre-authorized permission for broad categories of transactions that would otherwise be prohibited, applicable to all eligible parties without individual application

Answer

General licenses authorize certain categories of transactions for all eligible persons without requiring individual application to OFAC, such as allowing U.S. persons to receive salary payments from sanctioned governments for work performed prior to sanctions.

Question 5

How do 'secondary sanctions' on Iran affect non-U.S. financial institutions?

Accepted Answer

Non-U.S. institutions that engage in significant transactions with Iran may be denied access to the U.S. financial system and face other U.S. penalties

Answer

U.S. secondary sanctions on Iran can cut off non-U.S. financial institutions from the U.S. financial system if they engage in significant Iran-related transactions, giving these sanctions significant extraterritorial reach and deterrence effect.

CAMS - Certified Anti-Money Laundering Specialist Certification Practice Test

CAMS - Certified Anti-Money Laundering Specialist Certification Practice Test

CAMS Sanctions and OFAC Compliance 3