Which action should an institution take after freezing funds for a customer who became an EU- sanctioned subject?
Answer(s): C
EU sanctions require financial institutions to immediately freeze the funds or economic resources of designated persons and promptly report the freeze to the competent national authority. Reporting is mandatory to ensure oversight and enforcement.Banks must not transfer frozen funds, and they must not freeze accounts of family members unless those individuals are also designated or otherwise meet ownership/control criteria. Institutions also do not notify the customer directly, as doing so may undermine regulatory requirements.
EU asset-freeze reporting obligations to competent authorities.Prohibitions on transferring frozen assets or applying freezes to non-designated persons.
Independent testing related to sanctions screening should be conducted by which group with adequate technology expertise?
Answer(s): A
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.
OFAC and industry expectations for independent testing.Internal audit as the designated independent review function.
Which would constitute a deceptive shipping practice for the purpose of sanctions evasion?
Sanctions and Compliance Domains describe disabling or manipulating the Automatic Identification System (AIS) as a primary deceptive shipping practice used to obscure vessel movements, hide calls at sanctioned ports, and evade detection.Transshipment may create risk but is not inherently deceptive. Refueling at a prohibited port may violate sanctions but is not a deceptive practice by itself. Chartering a vessel to a single client is a normal commercial arrangement. AIS disabling is a recognized evasion tactic highlighted in global maritime advisories.
Deceptive shipping practices: AIS disabling, falsified documentation, and vessel masking.Maritime sanctions evasion indicators.
Which are key components of a sanctions compliance system model validation? (Select Three.)
Answer(s): A,B,D
Sanctions and Compliance Domains explain that model validation for sanctions screening systems must include:· Governance and management oversight, ensuring independent review, escalation paths, and proper control structures.· Identification and verification of all data sources, ensuring that all required and relevant reference data feeds are included in screening.· Matching algorithms and thresholds, which require testing, calibration, and validation to ensure accurate detection of potential sanctions matches.Storage capacity, automation, or multiple administrators are operational considerations but not core components of model validation.
Requirements for model governance and oversight.Validation of data sources and matching logic.Threshold testing and system calibration expectations.
A data quality review will often attempt to identify which issues? (Select Three.)
Answer(s): A,C,F
Data quality reviews focus on errors that negatively impact sanctions screening accuracy, such as:· Incorrect field placement (e.g., names in address fields), which causes screening failures.· Default or missing date values, which undermine proper identity matching.· Duplicate records, which complicate alert resolution and distort screening results.Use of separate name fields, uppercase text, or cultural naming conventions are not data errors but normal formatting variations.
Data field integrity requirements.Importance of accurate dates and non-duplicated entries.Data quality controls supporting sanctions screening systems.
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