Sanctions & Trade Compliance Flashcards

Which international framework establishes the foundational principles for UN-mandated sanctions regimes adopted by member states?

Answer: UN Security Council Chapter VII resolutions

UN Security Council resolutions under Chapter VII of the UN Charter are legally binding on all member states and form the basis for multilateral sanctions regimes.

A compliance officer receives a subpoena request from a foreign government for records of a U.S. sanctions investigation. What is the primary concern?

Answer: Risk of violating anti-boycott regulations under the EAR

Responding to foreign government requests to boycott certain countries or persons can violate U.S. anti-boycott regulations enforced by BIS under the EAR.

In a correspondent banking relationship, what does 'nested correspondent banking' refer to in the context of sanctions risk?

Answer: Third-party banks accessing U.S. dollar clearing through an intermediary correspondent

Nested correspondent banking occurs when a respondent bank allows its own customers (other banks) to access U.S. dollar clearing, obscuring the ultimate originators from the U.S. bank.

The Wassenaar Arrangement is a multilateral export control regime focused on which category of goods?

Answer: Conventional arms and dual-use goods and technologies

The Wassenaar Arrangement coordinates export controls on conventional arms and dual-use goods and technologies among its 42 participating states.

When a U.S. company acquires a foreign subsidiary that has ongoing contracts with SDN-listed entities, what must it do under OFAC rules?

Answer: Immediately wind down prohibited contracts within a reasonable time frame

Upon acquisition, U.S. persons become responsible for compliance; prohibited dealings with SDN entities must be wound down, typically within a defined wind-down period.

Which ITAR exemption allows U.S. defense contractors to share technical data with Canadian government entities without a license?

Answer: ITAR § 126.5 (Canada Exemption)

ITAR § 126.5 provides a special exemption for exports of certain defense articles and technical data to and for the Government of Canada.

A compliance program element requiring employees to report concerns about potential sanctions violations without fear of retaliation is known as what?

Answer: Whistleblower protection framework

Whistleblower protection frameworks encourage internal reporting by ensuring employees face no retaliation, a key component of effective sanctions compliance programs per OFAC guidelines.