CGSS EXAMS SCRIPT QUESTIONS AND ANSWERS GRADED
A+
✔✔Define the concept of money laundering - ✔✔Money laundering is the process of
concealing or disguising the existence, source, movement, destination, or illegal
application of illicitly derived property or funds to make them appear legitimate. Money
laundering typically involves a three-part system: placement of funds into a financial
system; layering of transactions to disguise the source, ownership, and location of the
funds; and integration of the funds into society in the form of holdings that appear
legitimate. The definition of money laundering varies in each country where it is
recognized as a crime.
✔✔What is the significance of the USA Patriot act to the field of anti-money laundering?
- ✔✔The Uniting and Strengthening America by Providing Appropriate Tools Required
to Intercept and Obstruct Terrorism Act of 2001 (USA PATRIOT Act) was enacted on
October 26, 2001. This historic US law brought about momentous changes in the anti-
money laundering field, including more than 50 amendments to the Bank Secrecy Act.
Title III of the act, the International Money Laundering Abatement and Anti-Terrorist
Financing Act of 2001, contains most, but not all, of its anti-money laundering-related
provisions.
✔✔How do sanctions relate to terrorist activities? - ✔✔Terrorist organizations require
funding for training, recruiting, and paying stipends to terrorists and their surviving family
members. Although terrorist groups may not be dissuaded by sanctions from pursuing
their agendas, the use of economic sanctions can dissuade states from providing refuge
and material support to terrorist groups.
In 1999, the UN Security Council established a sanctions regime that targeted
individuals and entities affiliated with Al-Qaeda and the Taliban. These sanctions have
been expanded to include individuals and entities affiliated with ISIS.
Following the attacks of September 11, 2001, the UN passed UNSCR 1373, which
obliged all of its Member States to sanction terrorist activity. Subsequent resolutions
have built on UNSCR 1373 for the purposes of countering terrorist financing.
✔✔How can sanctions serve to prevent the misappropriation of state resources? -
✔✔One of the purposes of sanctions is to freeze and return resources that have been
misappropriated by kleptocrats (i.e., corrupt leaders who exploit the people and
resources of a state for personal gain). As such, sanctions can aim to prevent corrupt
officials from embezzling and from accessing financial services in order to illegally
launder money taken while they were ruling their countries.
✔✔Are autonomous sanctions only implemented by single governments? If yes, give an
example of a single government that has autonomous sanctions. If not, give an example
,of a different entity that has autonomous sanctions. - ✔✔No. Autonomous sanctions can
be employed
by a single entity or government, such as Australia, or a coalition of governments, such
as the EU, acting to enforce a sanctions regime. Most countries have their own version
of autonomous, unilateral sanctions. However, the EU also has autonomous sanctions.
These occur when its Council decides to impose sanctions on its own initiative.
Although most countries in the EU do not rely on autonomous sanctions, choosing
instead to rely on the EU framework, EU member countries, in turn, can have their own
autonomous sanctions, such as when Latvia passed a version of the US's Magnitsky
Act in 2018, imposing travel restrictions on 49 Russian citizens.
✔✔Define the concept of globalization - ✔✔Globalization refers to the integration of
national economic, trade, and communication operations by businesses engaging in
international trade. Globalization generally includes the enlarging of national
perspectives to international and interdependent perspectives of society. It advocates a
freer transfer of goods, services, and assets across national and international
boundaries. It is believed that globalization may limit the effectiveness of sanctions
because a globalized market makes it easier to replace and reroute trade channels.
✔✔What are multilateral sanctions - ✔✔Multilateral sanctions are restrictions supported
by more than one country or entity. These can be imposed by allies against a common
enemy or for the purpose of realizing a greater economic and punitive impact.
Multilateral sanctions, such as those imposed by the UN, are generally more effective
than unilateral sanctions in achieving a foreign policy objective.
✔✔Define unilateral sanctions - ✔✔Unilateral sanctions are sanctions imposed by a
single country against a targeted entity These types of sanctions are generally
considered less effective than multilateral sanctions, although they do serve to target
specific offensive practices on behalf of imposing nations.
For example, the Magnitsky Act in the US allows for unilateral, global sanctions to be
imposed on human rights offenders. Assets can be frozen, and offenders may be barred
from entering the US. In the 1980s, Australia autonomously banned shipments of
uranium to France
With few exceptions (for example, the EU), unilateral sanctions are typically referred to
as autonomous sanctions
✔✔In the context of sanctions, what is the significance of articles 41, 25, and 48 of
Chapter VII of the UN's founding charter? - ✔✔Article 41 of Chapter VII of the UN's
founding charter establishes the right to impose sanctions as a measure to achieve
international peace and security.
After the UN Security Council adopts a resolution, it is legally binding under Articles 25
and 48 of the UN Charter. Article 25 requires Member States to "accept and carry out
the decisions of the Security Council in accordance with the present Charter."
,Article 48 of the Charter constitutes an affirmation of states' obligation under Article 25
of the Charter to accept binding decisions by the Council. Article 48 (1) allows the
Council to limit such duties to selected members, and (2) makes an attempt to co-opt
other international organizations into the United Nations peacekeeping system.
✔✔What is the purpose of the International Convention for the Suppression of the
Financing of Terrorism? - ✔✔International Convention for the
Suppression of the Financing of Terrorism was adopted by the UN General Assembly in
1999 to criminalize the financing of terrorism. The treaty calls for international
cooperation in the detecting and freezing of assets that are used, or intended for use, to
finance terrorism.
✔✔What criteria does the United Nations Security Council employ for targeting
individuals and entities with sanctions? - ✔✔The UN uses sanctions as a measure to
achieve international peace and security. Its Security Council has established key
criteria for targeting individuals and entities, including:
Threats to peace, security, or stability -Violations of human rights and international
humanitarian law
-Obstructing humanitarian aid
-Recruiting or using children in armed conflicts
✔✔What is the Bureau of Industry and Security (BIS), and what does it do? - ✔✔The
Bureau of Industry and Security (BIS) is a section of the US Department of Commerce
that is responsible for ensuring that financial sanctions are properly understood,
implemented, and enforced in the United States. Among other tasks, BIS regulates the
import and export of sensitive, dual use, and controlled goods and materials. BIS also
maintains the Entity List, the Denied Persons List, and the Unverified List.
The mission statement of BIS is: "Advance US national security, foreign policy, and
economic objectives by ensuring an effective export control and treaty compliance
system and promoting continued US strategic technology leadership."
✔✔What is the Office of Foreign Assets and Control - ✔✔The Office of Foreign Assets
Control (OFAC)
is an agency within the US Department of the Treasury that is responsible for
administering and enforcing economic sanctions issued as part of US foreign policy and
by international organizations, such as the United Nations, against targeted foreign
countries. It often works in consultation with other agencies, such as the Department of
State, to oversee national security goals. A core component of the agency's
responsibilities is the creation and maintenance of the Specially Designated Nationals
(SDN) list.
, ✔✔Who/what is included on the Specially Designated Nationals and Blocked Persons
(SDN) List, and how is the list used? - ✔✔OFAC's Specially Designated Nationals and
Blocked Persons (SDN) List is a list of individuals and companies that are owned,
controlled by, or acting on behalf of a targeted country. The list also includes groups
and people, such as terrorists and drug traffickers, who are associated with a specific
crime versus a country. The US Treasury maintains the list and may name a person or
company as an SDN.
When the government identifies a person or company as an SDN, it blocks their assets
and forbids US persons to do business with them. The government may also impose
fines and imprison lawbreakers, and individuals may lose their export privileges. The US
government may put the person or business on a list of blocked, denied, or debarred
individuals and institutions
✔✔Define Export Administration Regulations (EAR) - ✔✔The Export Administration
Regulations (EAR) comprise a set of regulations administered and enforced by the
Bureau of Industry and Security (BIS), a division of the US Department of Commerce.
They apply specifically to physical goods or commodities such as technology, software,
and other items subject to export controls.
✔✔For a financial institution or jurisdiction, what is the consequence of being
designated a primary money laundering concern? - ✔✔Section 311 of the USA
PATRIOT Act directs the Treasury to designate a financial institution or jurisdiction as
being of "primary money laundering concern" based on numerous factors,
including the extent to which the institution is used to facilitate or promote money
laundering. Although Section 311 is not technically a sanction, the results of Section
311 measures can be just as severe because they prohibit US financial institutions from
providing products or services to other financial institutions that in turn provide products
or services to one of the designated institutions or jurisdictions of concern. Moreover,
US institutions provide an annual notice to their foreign financial institution customers
warning them against maintaining these downstream correspondent accounts. The
targeted financial institution is effectively cut off from the US dollar payment system.
✔✔What are the six Financial Crimes Enforcement Network (FinCEN) suggested
guidelines for strengthening a compliance program? - ✔✔FinCEN suggests six
guidelines for strengthening compliance culture in financial institutions,
including:
1. Leadership must actively support and understand compliance efforts.
2. Efforts to manage and mitigate compliance deficiencies and risk must not be
compromised by revenue interests.
3. Relevant information from the various departments within the organization must be
shared with compliance staff to further the institution's compliance efforts.
A+
✔✔Define the concept of money laundering - ✔✔Money laundering is the process of
concealing or disguising the existence, source, movement, destination, or illegal
application of illicitly derived property or funds to make them appear legitimate. Money
laundering typically involves a three-part system: placement of funds into a financial
system; layering of transactions to disguise the source, ownership, and location of the
funds; and integration of the funds into society in the form of holdings that appear
legitimate. The definition of money laundering varies in each country where it is
recognized as a crime.
✔✔What is the significance of the USA Patriot act to the field of anti-money laundering?
- ✔✔The Uniting and Strengthening America by Providing Appropriate Tools Required
to Intercept and Obstruct Terrorism Act of 2001 (USA PATRIOT Act) was enacted on
October 26, 2001. This historic US law brought about momentous changes in the anti-
money laundering field, including more than 50 amendments to the Bank Secrecy Act.
Title III of the act, the International Money Laundering Abatement and Anti-Terrorist
Financing Act of 2001, contains most, but not all, of its anti-money laundering-related
provisions.
✔✔How do sanctions relate to terrorist activities? - ✔✔Terrorist organizations require
funding for training, recruiting, and paying stipends to terrorists and their surviving family
members. Although terrorist groups may not be dissuaded by sanctions from pursuing
their agendas, the use of economic sanctions can dissuade states from providing refuge
and material support to terrorist groups.
In 1999, the UN Security Council established a sanctions regime that targeted
individuals and entities affiliated with Al-Qaeda and the Taliban. These sanctions have
been expanded to include individuals and entities affiliated with ISIS.
Following the attacks of September 11, 2001, the UN passed UNSCR 1373, which
obliged all of its Member States to sanction terrorist activity. Subsequent resolutions
have built on UNSCR 1373 for the purposes of countering terrorist financing.
✔✔How can sanctions serve to prevent the misappropriation of state resources? -
✔✔One of the purposes of sanctions is to freeze and return resources that have been
misappropriated by kleptocrats (i.e., corrupt leaders who exploit the people and
resources of a state for personal gain). As such, sanctions can aim to prevent corrupt
officials from embezzling and from accessing financial services in order to illegally
launder money taken while they were ruling their countries.
✔✔Are autonomous sanctions only implemented by single governments? If yes, give an
example of a single government that has autonomous sanctions. If not, give an example
,of a different entity that has autonomous sanctions. - ✔✔No. Autonomous sanctions can
be employed
by a single entity or government, such as Australia, or a coalition of governments, such
as the EU, acting to enforce a sanctions regime. Most countries have their own version
of autonomous, unilateral sanctions. However, the EU also has autonomous sanctions.
These occur when its Council decides to impose sanctions on its own initiative.
Although most countries in the EU do not rely on autonomous sanctions, choosing
instead to rely on the EU framework, EU member countries, in turn, can have their own
autonomous sanctions, such as when Latvia passed a version of the US's Magnitsky
Act in 2018, imposing travel restrictions on 49 Russian citizens.
✔✔Define the concept of globalization - ✔✔Globalization refers to the integration of
national economic, trade, and communication operations by businesses engaging in
international trade. Globalization generally includes the enlarging of national
perspectives to international and interdependent perspectives of society. It advocates a
freer transfer of goods, services, and assets across national and international
boundaries. It is believed that globalization may limit the effectiveness of sanctions
because a globalized market makes it easier to replace and reroute trade channels.
✔✔What are multilateral sanctions - ✔✔Multilateral sanctions are restrictions supported
by more than one country or entity. These can be imposed by allies against a common
enemy or for the purpose of realizing a greater economic and punitive impact.
Multilateral sanctions, such as those imposed by the UN, are generally more effective
than unilateral sanctions in achieving a foreign policy objective.
✔✔Define unilateral sanctions - ✔✔Unilateral sanctions are sanctions imposed by a
single country against a targeted entity These types of sanctions are generally
considered less effective than multilateral sanctions, although they do serve to target
specific offensive practices on behalf of imposing nations.
For example, the Magnitsky Act in the US allows for unilateral, global sanctions to be
imposed on human rights offenders. Assets can be frozen, and offenders may be barred
from entering the US. In the 1980s, Australia autonomously banned shipments of
uranium to France
With few exceptions (for example, the EU), unilateral sanctions are typically referred to
as autonomous sanctions
✔✔In the context of sanctions, what is the significance of articles 41, 25, and 48 of
Chapter VII of the UN's founding charter? - ✔✔Article 41 of Chapter VII of the UN's
founding charter establishes the right to impose sanctions as a measure to achieve
international peace and security.
After the UN Security Council adopts a resolution, it is legally binding under Articles 25
and 48 of the UN Charter. Article 25 requires Member States to "accept and carry out
the decisions of the Security Council in accordance with the present Charter."
,Article 48 of the Charter constitutes an affirmation of states' obligation under Article 25
of the Charter to accept binding decisions by the Council. Article 48 (1) allows the
Council to limit such duties to selected members, and (2) makes an attempt to co-opt
other international organizations into the United Nations peacekeeping system.
✔✔What is the purpose of the International Convention for the Suppression of the
Financing of Terrorism? - ✔✔International Convention for the
Suppression of the Financing of Terrorism was adopted by the UN General Assembly in
1999 to criminalize the financing of terrorism. The treaty calls for international
cooperation in the detecting and freezing of assets that are used, or intended for use, to
finance terrorism.
✔✔What criteria does the United Nations Security Council employ for targeting
individuals and entities with sanctions? - ✔✔The UN uses sanctions as a measure to
achieve international peace and security. Its Security Council has established key
criteria for targeting individuals and entities, including:
Threats to peace, security, or stability -Violations of human rights and international
humanitarian law
-Obstructing humanitarian aid
-Recruiting or using children in armed conflicts
✔✔What is the Bureau of Industry and Security (BIS), and what does it do? - ✔✔The
Bureau of Industry and Security (BIS) is a section of the US Department of Commerce
that is responsible for ensuring that financial sanctions are properly understood,
implemented, and enforced in the United States. Among other tasks, BIS regulates the
import and export of sensitive, dual use, and controlled goods and materials. BIS also
maintains the Entity List, the Denied Persons List, and the Unverified List.
The mission statement of BIS is: "Advance US national security, foreign policy, and
economic objectives by ensuring an effective export control and treaty compliance
system and promoting continued US strategic technology leadership."
✔✔What is the Office of Foreign Assets and Control - ✔✔The Office of Foreign Assets
Control (OFAC)
is an agency within the US Department of the Treasury that is responsible for
administering and enforcing economic sanctions issued as part of US foreign policy and
by international organizations, such as the United Nations, against targeted foreign
countries. It often works in consultation with other agencies, such as the Department of
State, to oversee national security goals. A core component of the agency's
responsibilities is the creation and maintenance of the Specially Designated Nationals
(SDN) list.
, ✔✔Who/what is included on the Specially Designated Nationals and Blocked Persons
(SDN) List, and how is the list used? - ✔✔OFAC's Specially Designated Nationals and
Blocked Persons (SDN) List is a list of individuals and companies that are owned,
controlled by, or acting on behalf of a targeted country. The list also includes groups
and people, such as terrorists and drug traffickers, who are associated with a specific
crime versus a country. The US Treasury maintains the list and may name a person or
company as an SDN.
When the government identifies a person or company as an SDN, it blocks their assets
and forbids US persons to do business with them. The government may also impose
fines and imprison lawbreakers, and individuals may lose their export privileges. The US
government may put the person or business on a list of blocked, denied, or debarred
individuals and institutions
✔✔Define Export Administration Regulations (EAR) - ✔✔The Export Administration
Regulations (EAR) comprise a set of regulations administered and enforced by the
Bureau of Industry and Security (BIS), a division of the US Department of Commerce.
They apply specifically to physical goods or commodities such as technology, software,
and other items subject to export controls.
✔✔For a financial institution or jurisdiction, what is the consequence of being
designated a primary money laundering concern? - ✔✔Section 311 of the USA
PATRIOT Act directs the Treasury to designate a financial institution or jurisdiction as
being of "primary money laundering concern" based on numerous factors,
including the extent to which the institution is used to facilitate or promote money
laundering. Although Section 311 is not technically a sanction, the results of Section
311 measures can be just as severe because they prohibit US financial institutions from
providing products or services to other financial institutions that in turn provide products
or services to one of the designated institutions or jurisdictions of concern. Moreover,
US institutions provide an annual notice to their foreign financial institution customers
warning them against maintaining these downstream correspondent accounts. The
targeted financial institution is effectively cut off from the US dollar payment system.
✔✔What are the six Financial Crimes Enforcement Network (FinCEN) suggested
guidelines for strengthening a compliance program? - ✔✔FinCEN suggests six
guidelines for strengthening compliance culture in financial institutions,
including:
1. Leadership must actively support and understand compliance efforts.
2. Efforts to manage and mitigate compliance deficiencies and risk must not be
compromised by revenue interests.
3. Relevant information from the various departments within the organization must be
shared with compliance staff to further the institution's compliance efforts.
