CSS Financial Institution Obligations & Controls Flashcards

Under OFAC regulations, financial institutions must retain records of blocked transactions and rejected transactions for at least:

Answer: 5 years from the date of unblocking or for the duration of the blocking plus 5 years

OFAC regulations require records of blocked property to be retained for 5 years after the date the property was unblocked, or for the full period of blocking plus 5 years, whichever is longer.

A U.S. bank receives a SWIFT MT103 payment where the beneficiary name generates a potential SDN match. The bank's first step should be:

Answer: Place the payment in a suspense account and conduct enhanced screening to determine if a true match exists before blocking or processing

When a potential SDN match is identified, the institution should hold the transaction in suspense and perform additional due diligence to determine whether it is a true match before deciding to block, reject, or process.

What does OFAC consider a 'no-action' position mean for a financial institution analyzing a complex transaction?

Answer: OFAC's informal indication that it does not intend to take enforcement action for the specific described conduct

OFAC may informally communicate a no-action position to indicate it does not intend to pursue enforcement for a specific described fact pattern, though this is not binding and does not create a safe harbor.

Which OFAC requirement applies specifically to U.S. financial institutions processing international wire transfers related to potentially sanctioned transactions?

Answer: Screening both the originator and beneficiary of wire transfers against OFAC's sanctions lists

Financial institutions must screen all parties to international wire transfers — including originators, beneficiaries, and intermediaries — against OFAC sanctions lists to identify prohibited transactions.

In evaluating a financial institution's sanctions compliance program, OFAC assesses the program's adequacy based on which primary standard?

Answer: Whether the program is risk-based, commensurate with the institution's size and complexity, and effectively implemented

OFAC expects compliance programs to be risk-based and scaled to the institution's business profile — a community bank and a global money center bank face different expectations based on their transaction volumes and counterparty risk.

A financial institution's 'blocking report' submitted to OFAC must include which key information?

Answer: Identity of the account holder, nature and value of blocked property, and date of blocking

OFAC's blocking report requirement specifies that institutions must report the identity of the holder, a full description of the blocked property, its value, and the date of blocking within 10 business days.