Sanctions Investigations and Assets Freezing

Question 1

The term “asset flight” refers to:

Answer 1

the movement of assets from inside a soon-to-be-sanctioned area to outside the area, to ensure the assets’ future availability.

Question 2

Which item is a primary sources of information that can be used in an investigation?

Answer 2

Key trade activity lists

Question 3

How do customers typically learn that their assets have been frozen because of a sanctions violation?

Answer 3

Customers may receive no notice and generally discover that their assets have been frozen when they are unable to access their funds.

Question 4

Which of the following statements is true of frozen assets in the European Union?

Answer 4

Frozen assets can be used to pay for certain basic needs, such as food, rent, and legal support, provided the necessary document (license) has been obtained.

Question 5

Which of the following statements is true about general licenses?

Answer 5

General licenses authorize a particular type of transaction for a class of persons without the need to apply for a specific license.

Question 6

Which statement is true of specific licenses?

Answer 6

Specific licenses must be applied for from the competent regulatory body in the jurisdiction issuing the sanction.

Question 7

Which item describes a way to be delisted (removed from a sanctions targets list)?

Answer 7

By direct request from the target to the authority imposing the restrictions

Question 8

“Dealing in funds” refers to:

Answer 8

interacting with frozen assets in a way that is inconsistent with sanctions law.

Question 9

When sanctions regulations explain exactly what actions are permitted without a license, which actions are allowed only with a license, and under what circumstances certain actions are either allowed or not allowed, which of the following are they detailing?

Answer 9

The sanction’s scope of permitted activities

Question 10

If you identify funds belonging to a sanctions target or realize your firm has violated a sanctions restriction, what action should you take?

Answer 10

Record, date, and keep copies of all steps taken in the investigation.

Question 11

What is the legal term that refers to the country in which an individual lives most of the time?

Answer 11

The individual’s jurisdiction of residence

Question 12

What is the term for the process of reviewing a customer’s past transaction activity over a specific time period?

Answer 12

Look-back review

Question 13

Within the context of sanctions, the practice known as “mirror trading” refers to investors doing which of the following?

Answer 13

Buying securities in one currency and then selling identical ones in another currency

Question 14

What is a corporate register?

Answer 14

A list of key information about a company, such as when it was formed and who its owners and directors are

Question 15

What does the term “simple check” refer to?

Answer 15

The initial actions taken to discount or confirm a sanctions link

Question 16

Funds that are blocked or rejected due to an OFAC sanction must be reported to OFAC within which of the following?

Answer 16

10 business days from the date of the action

Question 17

What is a “false positive” match?

Answer 17

A match generated by an AST that is later deemed not to be a true match

Question 18

When conducting an investigation or interacting with frozen or blocked assets, where should you look first for information on how to proceed?

Answer 18

Your firm’s internal procedural documents

Question 19

Generally, what is involved in a sanctions investigation?

Answer 19

Investigations often begin with simple checks before progressing to further investigation such as account review, customer outreach, and possible escalation to the compliance function.

Question 20

As one of the first steps in an investigation, what is a simple check?

Answer 20

A simple check is the initial action taken to discount or confirm a sanctions link.

Question 21

What are the five steps comprising a typical sanctions investigation?

Answer 21

The five steps comprising a typical sanctions investigation: 1. Determine whether a sanctions restriction applies to the case under investigation. 2. Determine what types of restrictions the applicable sanctions impose. 3. Determine whether the sanctions that might apply have actually been violated. 4. Determine how the sanctions violation occurred. 5. Record and document the findings.

Question 22

Define mirror trade.

Answer 22

A mirror trade is a type of trade that involves buying securities in one currency and then selling identical ones in another currency.

Question 23

What is the difference between primary and secondary sources of information in a sanctions compliance context?

Answer 23

Primary sources of information provide direct evidence about sanctions and sanctions targets, such as key legal documents, key sanctions lists, key trade activity lists, and transaction activity. Secondary sources contain information that has generally already appeared in primary documents, such as corporate registers, third-party databases, and media publications.

Question 24

What are the most important considerations and potential red flags to address during a transactional review?

Answer 24

When conducting a transactional review, consider the following: * Transaction activities can be a good source of primary information. * Limit the review to transactions that occurred within a defined, optimal timeframe. * Determine the extent of payment message review. * Define the nature of payments that the review will encompass.

Question 25

What is a corporate register?

Answer 25

A corporate register is a listing of key information about a company, such as when a corporation was formed and who its owners and directors are.

Question 26

What is required in the initial schedules for reporting frozen assets?

Answer 26

Initial schedule reports provide the regulatory body with a detailed breakdown of the financial institution’s exposure to the sanctions target.

Question 27

What does it mean when a financial institution “deals in funds”?

Answer 27

Dealing in funds occurs when a financial institution moves, transfers, alters, uses, or accesses funds it has frozen. It also includes interacting with funds in any way that would result in any change to their volume, amount, location, ownership, possession, character, or destination, or any change that would enable the funds to be used, including portfolio management.

Question 28

What is civil asset forfeiture?

Answer 28

In civil asset forfeiture, assets unrelated to the commission of a crime can be taken from the individual accused of committing a crime.

Question 29

In the context of licensing required to freeze assets, what does “scope of permitted activities” mean?

Answer 29

The scope of permitted activities specifies exactly which activities are permitted without a license under a sanction, and which are only permitted with a license (possibly permitted only within a certain period of time or during specified seasons).

Question 30

How can you obtain a corporate register?

Answer 30

Corporate (or company) registers are often publicly available on the company’s website or websites maintained by professional associations or entities, such as chambers of commerce or legal databases. In the United States, the secretary of state for each state and the District of Columbia maintains an online register for corporations doing business in that state.

Question 31

What is required in the periodic schedules for reporting frozen assets?

Answer 31

Periodic schedule reports provide a summary of the assets the firm is holding in compliance with specific sanctions restrictions and how the assets have been segregated.

Question 32

What is asset confiscation/seizure?

Answer 32

Asset confiscation/seizure is the practice of taking ownership of an individual’s or legal entity’s assets during or as the result of an investigation into a sanctions violation.

Question 33

What is the goal of asset forfeiture and asset confiscation/seizure?

Answer 33

The goal of asset forfeiture and confiscation/seizure is to help law enforcement agencies defund organized crime and prevent the commission of new crimes.