CAMS Sanctions and OFAC Compliance

Question 1

What is the Office of Foreign Assets Control (OFAC) and what is its primary function?

Accepted Answer

A U.S. Treasury office that administers and enforces economic and trade sanctions against targeted foreign countries, entities, and individuals

Answer

A division of the FBI that investigates financial crimes

Answer

A Federal Reserve body that regulates bank capital requirements

Answer

An international organization that coordinates global sanctions programs

Question 2

What is the Specially Designated Nationals (SDN) list maintained by OFAC?

Accepted Answer

A list of individuals, entities, and countries with whom U.S. persons and institutions are prohibited from conducting business

Answer

A list of approved foreign correspondents for U.S. banks

Answer

A list of high-net-worth foreign customers eligible for private banking services

Answer

A list of designated non-financial businesses subject to AML requirements

Question 3

What is 'blocking' in the context of OFAC sanctions compliance?

Accepted Answer

Freezing and segregating funds or assets of a sanctioned party pending further OFAC guidance

Answer

Preventing a customer from accessing their account due to suspected fraud

Answer

Blocking wire transfer instructions due to incomplete information

Answer

Preventing a currency transaction from proceeding because it exceeds reporting thresholds

Question 4

A U.S. bank receives a wire transfer from a foreign bank in which 51% is owned by a sanctioned entity. Under OFAC's '50 percent rule,' should this transaction be blocked?

Accepted Answer

Yes, because any entity 50% or more owned (directly or indirectly) by an SDN is itself treated as sanctioned, even if not explicitly listed

Answer

No, because the sanctioned entity does not directly own the wire transfer

Answer

No, because the foreign bank itself is not on the SDN list

Answer

Yes, but only if the wire transfer amount exceeds $10,000

Question 5

What does OFAC's 'license' process allow?

Accepted Answer

It grants specific authorization for transactions that would otherwise be prohibited under sanctions programs

Answer

It licenses financial institutions to conduct business in high-risk countries

Answer

It certifies AML officers to conduct sanctions screening

Answer

It licenses technology vendors to sell sanctions screening software

Question 6

Which of the following is a strict liability offense under OFAC sanctions regulations?

Accepted Answer

Processing a transaction with a sanctioned party, even if the institution did not know the party was sanctioned

Answer

Failing to detect a potential sanctions match in customer screening

Answer

Filing a SAR for a transaction later found to have no criminal nexus

Answer

Failing to implement a sanctions screening program