Free Practice Questions for ACAMS CGSS Exam

OFAC regulations require that blocked funds must be placed into an interest-bearing account, held separately, and reported to OFAC. This does not require preauthorization from OFAC.

However, no debits or credits may occur without OFAC authorization, including:

• settling standing bills or checks (A),

• charging interest or loan/corporate card fees (C),

• deducting credit-card service charges (B).

Only OFAC can authorize movement or use of blocked property.

Sanctions and Compliance Domains state that independent testing and auditing must be conducted by a group separate from the sanctions operations and screening management teams. Internal audit is typically the independent function with sufficient technology and control expertise to assess system performance, threshold calibration, governance, and rule sets.

Teams involved in day-to-day operations (investigations, list management, risk assessment) cannot test their own work due to conflicts of interest.

UN sanctions are imposed by the UN Security Council as part of its mandate to maintain international peace and security. They are intended to influence behavior, prevent conflict, suppress terrorism, and stabilize global security conditions.

While asset freezes and travel bans are common measures (option D), they are examples, not the fundamental reason for imposing sanctions. Option C describes the overarching purpose.

OFAC regulations permit the use of USD for Cuba-related transactions only when explicitly authorized under specific exceptions or general licenses. These include certain remittances, humanitarian transactions, and authorized travel-related transactions.

General USD use with Cuba is otherwise prohibited unless OFAC has expressly allowed it through a license or regulatory exemption.

When a potential sanctions match is detected, the required first action is to determine whether the alert represents a true match or a false positive. This involves comparing identifiers, reviewing customer documentation, and gathering additional details.

CDD is important but is not the specific required action at the moment of match investigation. The priority is confirming whether the entity is indeed the sanctioned party.

The OFAC 50% Rule states:

• Any entity owned 50% or more — directly or indirectly — by an SDN or SDN-owned entity is itself automatically blocked.

• Ownership is cumulative through all tiers.

Apply the rule:

✔ A – Blocked Person X has direct + indirect ownership in Entity C exceeding 50% → Blocked.

✔ C – Ownership cascades: SDN → A → B → C; each at 50%. Result: Entity C is blocked.

✔ D – Blocked Entity A (>50%) → owns B (>50%) → owns C (>50%). All downstream entities are blocked.

Not blocked:

• B = 25% + 25% = 50% but SDN does not directly own A or B — the SDN owns A and B, but A and B each are not blocked themselves because ownership is not aggregated across separate entities unless they hold shares. Therefore, C is not blocked.

• E = Only 25% flows into Entity C.

• F = Neither ownership chain reaches 50%.

Sanctions and Compliance Domains outline that institutions must maintain effective and reliable sanctions screening systems. This includes screening all incoming and outgoing payment messages, and institutions may not rely solely on correspondent banks for sanctions controls. Screening tools must also be capable of detecting alternative spellings, transliterations, and name variations of sanctioned parties.

Sanctions list updates must be incorporated immediately or as soon as practicable after publication. Monthly updates would be considered insufficient.

The use of controlled internal whitelists, combined with proper governance, periodic review, and controlled threshold calibration, is an accepted method used to reduce false positives while maintaining compliance integrity. Threshold adjustments must always follow documented validation, testing, and oversight procedures.

References from Sanctions and Compliance Domains:

Requirements for screening all payment messages, including incoming SWIFT transfers.

System expectations for matching name variations and alternative spellings.

Regulatory expectations for timely list updates.

Recognition of whitelist use and threshold calibration as acceptable screening optimization methods.

OFAC's 2015 Guidelines indicate that internal sanctions lists must be updated:

• when changes occur to sanctions target listing information, and

• when enhanced restrictions or new requirements are imposed, including new Executive Orders, program changes, or sector restrictions.

OFAC does not mandate monthly reviews, daily reviews following system upgrades, or reviews based on percentage changes in customer data. Updates must correspond to regulatory changes, not arbitrary timelines.

“Stripping” refers to removing, altering, or replacing material information from payment messages, invoices, or trade documents to conceal a sanctioned party, vessel, location, or jurisdiction. It is a recognized sanctions evasion technique used by actors seeking to bypass automated screening.

Examples include removing the sanctioned port name, omitting the ultimate consignee, or deleting identifying references.

This is distinct from structuring (option A), price manipulation (B), or dual messaging (C).