Free Practice Questions for ACAMS CGSS Exam

US sanctions and export-control laws apply to US companies and their owned or controlled foreign subsidiaries. Shipping dual-use items to Iran and falsifying end-user location information constitutes a serious sanctions violation and potential export-control breach.

Sanctions and Compliance Domains emphasize that upon discovery of such activity, the company must immediately cease the shipment of goods to sanctioned destinations and strengthen its sanctions compliance program. This must include enhanced oversight, stricter internal controls, and remediation of misconduct.

Reliance on subsidiary attestations or attempts to route transactions through non-US institutions does not eliminate US sanctions liability.

Sanctions and Compliance Domains highlight that sanctioned individuals may attempt to evade restrictions by transferring assets, ownership rights, or operational control to family members or close associates. These transfers may appear legitimate but are often structured to conceal continuing beneficial ownership or influence.

Asset transfers to relatives or trusted associates are recognized as classic sanctions evasion red flags across EU and UK ownership and control guidance.

Opening bank accounts in non-aligned jurisdictions may create exposure, but the specific red flag of evasion is the movement of assets to associates. Changes in corporate strategy or reduced trading activity are not inherently indicative of sanctions evasion.

Sanctions and Compliance Domains specify that correspondent banking relationships require a comprehensive assessment of the respondent bank’s sanctions risk exposure. Relevant factors include:

• Licensing authorities – Banks licensed in jurisdictions with weak sanctions controls, inadequate supervision, or misaligned regulatory frameworks pose heightened risk. Regulatory oversight directly influences sanctions compliance effectiveness.

• Location of operations – Geographies influence exposure to sanctioned countries, transshipment risks, proliferation financing threats, and proximity to high-risk jurisdictions. Geographic expansion may introduce new sanctions obligations and monitoring requirements.

• Products and services offered – Certain products (e.g., trade finance, cross-border payments, payable-through accounts) carry inherently higher sanctions risk. As respondent banks expand their service offerings, the correspondent institution must reassess associated risks.

The registration number is not relevant to sanctions exposure. Bank representatives may factor into KYC but are not core sanctions-risk elements. The respondent’s customers’ business activity is considered indirectly through the respondent bank’s controls and risk profile, but primary assessment focuses on the bank’s licensing, geography, and product set.

OFAC general licenses commonly authorize the export of agricultural commodities, medicine, and medical devices to sanctioned countries under humanitarian exemptions. These items are recognized as essential goods and are generally permitted even in comprehensive sanctions programs, provided specific conditions are met.

Luxury goods such as gold, raw materials like iron and steel, and petroleum-related products are typically prohibited or require specific licensing.

OFAC has designated:

• Hackers and cyber actors involved in cryptocurrency theft.

• Cryptocurrency exchanges facilitating illicit transactions or supporting sanctioned jurisdictions.

• Mixers (tumblers) known to anonymize blockchain transactions and facilitate laundering and sanctions evasion.

Software developers (D) are generally not designated unless directly linked to illicit activity. Credit unions and central banks are not typical OFAC digital-asset designations.

A sound governance framework, according to Sanctions and Compliance Domains, includes:

• Senior management ensuring adequate resources to investigate violations, identify weaknesses, and remediate control gaps.

• Updating the sanctions risk assessment to incorporate findings and root causes from prior incidents.

Human resources actions (A) are not a primary governance function. Reporting based on “lack of penalty” (D) is not a risk-based governance indicator. Zero-tolerance statements (E) do not constitute governance processes and may conflict with risk-based management expectations.

Sanctions and Compliance Domains emphasize the importance of identity, residency, location indicators, and digital footprints when assessing potential sanctions violations.

Dual residency in a sanctioned country may trigger sanctions exposure because residency can determine jurisdictional reach. Likewise, IP addresses reveal the customer’s actual geographic location during transactions and are critical in identifying hidden connections to sanctioned jurisdictions.

Transaction size thresholds, routine salary information, or transfers within non-sanctioned countries do not directly indicate sanctions violations.

Under OFAC’s 50 Percent Rule, any entity that is owned 50% or more—individually or in aggregate—by one or more Specially Designated Nationals (SDNs) is considered automatically blocked, even if not explicitly listed.

Financial institutions must treat such entities as if they are SDNs. Therefore, the account cannot be opened. Senior management approval cannot override OFAC regulations, and altering ownership to bypass sanctions is prohibited facilitation.

Cigars, particularly those originating from Cuba or other embargoed jurisdictions, fall under both EU and US export sanctions restrictions. Under US OFAC regulations, Cuban-origin goods—including cigars—are strictly prohibited from import, export, resale, or re-export by US persons. EU sanctions may also restrict trade with embargoed or designated jurisdictions.

Textbooks, toys, and art reproductions generally do not fall under export prohibitions unless tied to dual-use concerns or specific jurisdictions, which is not indicated here. Cigars present the most direct and well-established sanctions risk.