CGSS STUDY EXAM GUIDE QUESTIONS AND ANSWERS
GRADED A+
✔✔Staying current with the political climate, requiring vendors to provide updated
information, monitoring government websites through subscriptions, and creating
tailored news alerts are ways in which a firm can: - ✔✔stay current on sanctions.
✔✔What is the role of policies and procedures as aspects of an institution's sanctions
compliance program? - ✔✔They identify, interdict, escalate, report, and maintain
records concerning potentially prohibited activities.
✔✔Which of the following statements reflects the role of the independent audit in a
financial institution's sanctions compliance program? - ✔✔Auditing assesses the overall
integrity and effectiveness of the compliance program, including policies, procedures,
and processes.
✔✔An effective employee training program is an integral component of a successful
sanctions compliance program and generally should: - ✔✔hold employees accountable
for sanctions compliance training through assessments.
✔✔As a sanctions regime in the United States, what is one of the purposes of the Office
of Foreign Assets Control (OFAC)? - ✔✔It enacts and regulates sanctions to mitigate
threats to national security, foreign policy, and the US economy.
✔✔The European Union sanctions regime comprises which of the following? - ✔✔All
sanctions imposed by the Common Foreign Security Policy Council and published in the
Official Journal of the European Union, and all sanctions imposed by the UN Security
Council
✔✔**Which of the following is an example of controls used within a sanctions
compliance program to mitigate its inherent risks? - ✔✔Independent testing
✔✔Which US agencies are responsible for issuing licenses that allow financial
institutions to do business with companies or organizations that are under sanction? -
✔✔The Office of Foreign Assets Control (OFAC) and the Bureau of Industry and
Security (BIS)
✔✔The United States and the European Union have imposed sanctions on Company X.
The company's owners try to evade the sanctions by reducing their holdings in
Company X to less than 50%. What is this evasion technique called? - ✔✔Dilution of
sanctioned ownership
✔✔How long does a counterparty relationship last? - ✔✔For the life of the transaction
, Counterparty Relationships Given the complexity of a transaction, it is vital for an
organization to know not only their customers, but also the customers' counterparties,
as well as the parties who own or control them, in order to understand who may be
behind sanctions evasion
A counterparty is simply the other side of a transaction—the seller where the customer
is the buyer, or vice versa. An institution establishes counterparty relationships with
other third-party participants in a transaction for an established customer.
p. Such a relationship usually exists only for the life of the transaction itself, as there are
no agreements or contracts between an institution and this entity or individual.
✔✔A bank employee completes a transaction for a company that is under EU
sanctions. The employee does this by routing the payment through a bank that is
outside the EU and removing the relevant information from the payment method. What
is the name of this type of sanctions evasion? - ✔✔Stripping
✔✔Why is it necessary for a financial institution to review its whitelists regularly? - ✔✔A
staffer may intentionally add a sanctioned individual or institution.
✔✔Which types of SWIFT messages do banks usually send together? - ✔✔MT103 and
MT202COV
Three types of SWIFT messages for general processing of transactions will be detailed:
MT103, MT202, and MT202COV
Financial institutions usually send the MT103 and MT202COV messages together so
that all parties have full transparency for the transaction.
The original MT103 goes to the beneficiary bank, but copies of the message can go to
any intermediary banks needed to process the transaction. The messages provide
complete information about the remitter and the beneficiary to all banks involved.
To decrease processing time, it is common for an originating bank to use the cover
method, whereby the originating bank sends the MT103 directly to the beneficiary bank
while sending the MT202COV indirectly to the involved correspondent banks
✔✔Which of the following tactics do people use to avoid detection during sanctions
payment screening? - ✔✔Using unusual combinations of characters, such as #!$#!$
They may replace information with false data.
For example, they may use a bank identifier code assigned to a bank in a "neutral
country".
GRADED A+
✔✔Staying current with the political climate, requiring vendors to provide updated
information, monitoring government websites through subscriptions, and creating
tailored news alerts are ways in which a firm can: - ✔✔stay current on sanctions.
✔✔What is the role of policies and procedures as aspects of an institution's sanctions
compliance program? - ✔✔They identify, interdict, escalate, report, and maintain
records concerning potentially prohibited activities.
✔✔Which of the following statements reflects the role of the independent audit in a
financial institution's sanctions compliance program? - ✔✔Auditing assesses the overall
integrity and effectiveness of the compliance program, including policies, procedures,
and processes.
✔✔An effective employee training program is an integral component of a successful
sanctions compliance program and generally should: - ✔✔hold employees accountable
for sanctions compliance training through assessments.
✔✔As a sanctions regime in the United States, what is one of the purposes of the Office
of Foreign Assets Control (OFAC)? - ✔✔It enacts and regulates sanctions to mitigate
threats to national security, foreign policy, and the US economy.
✔✔The European Union sanctions regime comprises which of the following? - ✔✔All
sanctions imposed by the Common Foreign Security Policy Council and published in the
Official Journal of the European Union, and all sanctions imposed by the UN Security
Council
✔✔**Which of the following is an example of controls used within a sanctions
compliance program to mitigate its inherent risks? - ✔✔Independent testing
✔✔Which US agencies are responsible for issuing licenses that allow financial
institutions to do business with companies or organizations that are under sanction? -
✔✔The Office of Foreign Assets Control (OFAC) and the Bureau of Industry and
Security (BIS)
✔✔The United States and the European Union have imposed sanctions on Company X.
The company's owners try to evade the sanctions by reducing their holdings in
Company X to less than 50%. What is this evasion technique called? - ✔✔Dilution of
sanctioned ownership
✔✔How long does a counterparty relationship last? - ✔✔For the life of the transaction
, Counterparty Relationships Given the complexity of a transaction, it is vital for an
organization to know not only their customers, but also the customers' counterparties,
as well as the parties who own or control them, in order to understand who may be
behind sanctions evasion
A counterparty is simply the other side of a transaction—the seller where the customer
is the buyer, or vice versa. An institution establishes counterparty relationships with
other third-party participants in a transaction for an established customer.
p. Such a relationship usually exists only for the life of the transaction itself, as there are
no agreements or contracts between an institution and this entity or individual.
✔✔A bank employee completes a transaction for a company that is under EU
sanctions. The employee does this by routing the payment through a bank that is
outside the EU and removing the relevant information from the payment method. What
is the name of this type of sanctions evasion? - ✔✔Stripping
✔✔Why is it necessary for a financial institution to review its whitelists regularly? - ✔✔A
staffer may intentionally add a sanctioned individual or institution.
✔✔Which types of SWIFT messages do banks usually send together? - ✔✔MT103 and
MT202COV
Three types of SWIFT messages for general processing of transactions will be detailed:
MT103, MT202, and MT202COV
Financial institutions usually send the MT103 and MT202COV messages together so
that all parties have full transparency for the transaction.
The original MT103 goes to the beneficiary bank, but copies of the message can go to
any intermediary banks needed to process the transaction. The messages provide
complete information about the remitter and the beneficiary to all banks involved.
To decrease processing time, it is common for an originating bank to use the cover
method, whereby the originating bank sends the MT103 directly to the beneficiary bank
while sending the MT202COV indirectly to the involved correspondent banks
✔✔Which of the following tactics do people use to avoid detection during sanctions
payment screening? - ✔✔Using unusual combinations of characters, such as #!$#!$
They may replace information with false data.
For example, they may use a bank identifier code assigned to a bank in a "neutral
country".
