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Flashcards in OFAC Deck (29):
1

Definition: An account in which payments, transfers, withdrawals, or other dealings may not be made without authorization from OFAC. Debts are prohibited; however, credits are not.

Blocked account

2

What does SDN stand for?

Specially designated nationals

3

Definition: Persons who are considered to be nationals of the target country because they are known to be acting on behalf of the target country or are associated with international narcotics trafficking or terrorism.

Specially designated nationals

4

Definition: anything of value, including but not limited to money, deposits, notes, stocks, bonds, securities, bills of lading, bankers' acceptances, evidences of ownership, mortgages/deeds, real estate, goods, AP, negotiable instruments, SDB contents, personal property, annuities, POAs, contracts and so forth. This is any interest whatsoever, direct or indirect.

Property/property interests

5

All reports on blocked accounts or rejected transactions must be sent to OFAC within __ ________ days of the occurrence.

10 business

6

What information is required to be sent to OFAC on blocked assets?

- ID of the property
- Owner of the account
- Property address and location
- account number
- Value of the account (actual or estimated)
- Blocking date
- Photocopy of the transfer or payment instructions
- Confirmation that the funds have been deposited into a blocked account. The ID of the individual or entity subject to blocking should be clearly ID'd.
- Name and phone number of compliance personnel at the bank who have knowledge of the transaction

7

What information is required to be sent to OFAC on rejected transactions?

- Name and address of the FI requesting the transfer
- Date and amount of the transfer
- Photocopy of the transfer or payment order
- Reason for rejection
- Name and phone number of the compliance personnel at the bank who has knowledge of the transaction

8

If a transaction should have been blocked or rejected, OFAC may send a letter requesting information on how the transaction was processed. The bank has __ days to reply and request no penalty or a reduction in penalty.

30

9

An annual report on blocked accounts as of June 30 of each year must be filed by ______ __ of that same year.

Sept 30

10

All blocked accounts must be placed in an ______________________________________.

interest-bearing account earning interest at a commercially reasonable rate, that is a rate currently offered to other depositors on deposits or instruments of comparable size and maturity.

11

Is right of offset permitted on blocked accounts that are placed in interest-bearing accounts? Can a bank debit a service charge against the account?

No
Yes

12

How long must banks retain records for rejected transactions?

5 years

13

How long must banks retain records for blocked property?

For the amount of time the period is blocked and for an additional 5 years after the property has been released

14

In case of a violation, what two actions does OFAC consider favorably?

- The use of interdiction software
- The use of good-faith manual and electronic efforts

15

How often should in-depth audits be conducted for OFAC compliance?

Annually

16

Voluntary self-disclosure of a violation reduces the base civil money penalty amount by __%.

50%

17

Definition: the most serious sanctions violations based on an analysis of the General Factors, giving substantial weight to whehter the violation was a willful, reckless, or subject was aware of the violation and harm to the sanctions program objectives and individual characteristics of the subject person.

Egregious cases

18

OFAC will issue a _______ notice if it has reason to believe a violation has occurred and a civil monetary penalty is warranted.

pre-penalty

19

The BSA officer has just been notified by the chief operations officer that, due to a glitch in the bank’s OFAC interdiction software, wires have been regularly transmitted to a bank on the SDN list. Based on the OFAC Enforcement Guidance, what should the BSA Officer do FIRST to attempt to mitigate any penalties?

a. Review the OFAC wire policies and procedures to determine how the errors occurred
b. Stop and hold all wires to the bank on the SDN list
c. Investigate the customer who sends these wires
d. Self-report the activity to OFAC

b. Stop and hold all wires to the bank on the SDN list

While all of these actions are important and should be undertaken, stopping the conduct should be done immediately.

20

Your institution has identified a deposit made by an existing depositor to an entity on the OFAC SDN list that should be blocked under OFAC requirements. The branch manager contacts you for specific instructions. Before reporting the transaction to OFAC, what should the bank do?

a. Reject the transaction
b. Process the transaction
c. Close the customer's account
d. Place the funds in an interest-bearing account

d. Place the funds in an interest-bearing account

21

Your bank’s president comes back from an industry conference and tells the compliance officer that she attended a presentation about OFAC. She heard the bank could be fined for not adhering to OFAC requirements. Thus, she has directed that every bank transaction be reviewed for OFAC compliance. What is the most appropriate statement the compliance officer could make to the bank president?

a. The bank is already in compliance because OFAC checks are performed on all new depositors
b. The bank has assessed its OFAC risk and has implemented risk-based OFAC procedures
c. OFAC does not apply because the bank does not conduct business in foreign countries or with foreign nationals
d. Banks are usually not fined for OFAC violations unless they conduct transactions with SDNs or blocked countries

b. The bank has assessed its OFAC risk and has implemented risk-based OFAC procedures

A risk-based program is required by the BSA/AML interagency manual.

22

What should a bank do when it receives a request from a customer to transfer funds to an individual in Iraq?

a. Conduct the transfer as requested
b. Conduct the transfer if the individual and the financial institution are not on the SDN list
c. Block the transfer
d. Conduct the transfer and then notify OFAC immediately

b. Conduct the transfer if the individual and the financial institution are not on the SDN list

The bank must check the person and the financial institution receiving the funds. If neither is an SDN, the transfer can be made.

23

Which of the following countries are currently subject to the Office of Foreign Assets Control Regulations?

a. North Korea
b. Jordan
c. Bahrain
d. Russia

a. North Korea

North Korea is covered under OFAC regulations, pursuant to the Trading with the Enemy Act, the Anti-Terrorism Act, and the Effective Death Penalty Act.

24

FA presents cash to the bank and seeks to wire it to his spouse, RA, in Iran. The OFAC list identifies RA as a specially designated national. Under OFAC Regulations, what should the bank do?

a. Block the transfer
b. Conduct the transfer as requested and take no further action
c. Conduct the transfer as requested and notify OFAC immediately
d. Conduct the transfer only if the bank determines that Iran is not a blocked country

a. Block the transfer

25

State National Bank is a $250 million community bank. It makes a variety of consumer and commercial loans, regularly transmits funds via wire transfers for its customers, and issues commercial and stand-by letters of credit. Which of the following transactions can State National make without checking the OFAC SDN list and without incurring liability?

a. Send a wire transfer via its correspondent bank in New York for a commercial customer.
b. Sell a cashier's check payable to a third party.
c. Cash an on-us check over-the-counter for a noncustomer.
d. None. The bank can be liable for all.

d. None. The bank can be liable for all.

26

ACME Bank is a $600 million institution with 15 branches within three counties. Because of its proximity to Mexico, the bank has many foreign national customers and makes many foreign wire transfers for its customers. Currently the bank’s branch managers print the OFAC list of SDNs and place them in strategic places in each branch. The wire transfer department keeps its own copy of the list. The compliance officer has implemented an annual auditing program to check the bank’s compliance with OFAC regulations. The findings of this audit are provided to the bank’s board of directors annually. The bank’s regulatory agency has indicated to management that the bank has a high risk for BSA/AML/OFAC compliance. Of the following actions, which would be the most effective to strengthen the bank’s OFAC compliance?

a. Conduct compliance audits twice a year
b. Purchase and implement interdiction software for the wire transfer area
c. As an internal control procedure, require the BSA officer to check the OFAC Web site daily for any changes to the SDN list
d. Routinely provide account transaction information to federal security agencies so suspicious patterns can be detected

b. Purchase and implement interdiction software for the wire transfer area

The bank should conduct regular OFAC training for all employees and maintain internal control procedures. It is not necessary to audit compliance with OFAC regulations more often than once a year, but in a bank of this size with the level of risk involved, the bank should invest in interdiction software for at least the wire transfer area and preferably for all operational areas.

27

OFAC is an office with which U.S. government agency?

a. State Department
b. Central Intelligence Agency
c. Office of the President
d. U.S. Treasury Department

d. U.S. Treasury Department

28

Which of the following best describes who is subject to OFAC regulations?

a. All U.S. Persons
b. Federally chartered U.S. banks and bank holding companies
c. All financial institutions operating in the U.S.
d. Federally and state chartered banks and credit unions

c. All financial institutions operating in the U.S.

29

Your bank has identified an account that is subject to OFAC sanctions and has blocked the account. What additional responsibilities does the bank have with respect to the blocked account?

a. Transfer the funds to the U.S. Treasury Department within 10 business days
b. Report the blocked account to OFAC within 10 business days
c. Notify the accountholder of the procedures for obtaining an OFAC license
d. Notify your primary regulator

b. Report the blocked account to OFAC within 10 business days