QUESTION: 6

EU Restrictive Measures apply: (Select Two.)

on a vessel under the jurisdiction of an EU Member State.
to a company incorporated under the law of a non-EU country, that is 45% owned by a national of an EU Member State.
within a non-EU country, which has a double taxation convention with all EU Member States.
within a non-EU country which is part of the Customs Union agreement with the EU.
to a company outside the territory of the EU, which is incorporated or constituted under the law of an EU Member State.

Answer(s): A,E

Explanation:

EU Restrictive Measures apply to all persons and entities within the territory of the EU, including airspace and territorial waters, and to any vessel or aircraft under the jurisdiction of an EU Member State. This establishes that sanctions obligations extend to vessels registered under EU jurisdictions regardless of location.

EU sanctions also apply to all legal persons, entities, and bodies incorporated or constituted under the law of an EU Member State, even when those entities operate entirely outside EU territory. Legal incorporation under EU law creates an ongoing obligation to comply with EU sanctions.

EU ownership by itself does not trigger sanctions applicability, so a non-EU company that is 45% owned by an EU national does not fall under EU Restrictive Measures. Additionally, arrangements such as double-taxation conventions or participation in customs union agreements do not extend the territorial or legal applicability of EU sanctions to non-EU jurisdictions.

Reference from Sanctions and Compliance Domains:

Territorial applicability of EU sanctions, including vessels and aircraft under Member State jurisdiction.

Applicability to companies incorporated under EU Member State law regardless of geographic operations.

Legal and territorial definitions outlining the scope of EU Restrictive Measures.

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QUESTION: 7

Based on the Wolfsberg Guidance on Sanctions Screening, what are the core principles for generating productive alerts? (Select Two.)

Manual processes that ensure lists are screened only against specific jurisdictional data
Including exclusions for parties that pose low risks to be omitted from screening
Addressing the inclusion of a "good guy" list so that it does not suppress common false positives
Reducing the threshold settings from the optimal level to create more productive alerts
Reviewing and removing reference data from screening, on an ongoing basis, once the data is no longer risk relevant

Answer(s): C,E

Explanation:

The Wolfsberg Guidance identifies that effective sanctions screening depends on high-quality, risk- relevant reference data. Institutions must regularly review and remove outdated or irrelevant data to avoid generating unnecessary alerts and ensure screening outputs remain meaningful. Maintaining accurate and current data reduces noise and increases the productivity of alerts.

The Guidance also emphasizes that institutions may use "good guy lists" to reduce false positives, but these lists must be maintained in a controlled way to ensure they do not unintentionally suppress alerts that could indicate sanctions risk. Proper governance must accompany good-guy lists so that risk-relevant entities are not excluded from screening.

The Guidance does not support reducing thresholds to generate more alerts, nor does it promote removing low-risk parties without structured criteria. It also does not recommend manual jurisdiction-specific screening as a method of improving alert quality.

Reference from Sanctions and Compliance Domains:

Wolfsberg principles on management of reference data for sanctions screening.

Guidance on proper use and governance of "good guy lists."

Recommendations for ensuring alerts remain relevant, accurate, and risk-based.

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QUESTION: 8

Which action is an acceptable strategy for a financial institution's payment sanctions screening process?

The institution excludes incoming SWIFT transfers from sanction screening, instead relying on the controls of the sending/correspondent bank.
The institution uses software that does not account for alternative spellings of prohibited countries or parties.
The institution incorporates updates to sanction listings into its automated screening tool on a monthly basis.
The institution uses internally managed whitelists and calibrates the threshold to reduce false positives.

Answer(s): D

Explanation:

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.

Reference 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.

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QUESTION: 9

The Office of Foreign Assets Control has focused on sanctions risks in mergers and acquisitions by undertaking which action?

Considering enforcement actions against companies that knowingly fail to do sufficient due diligence
Pursuing enforcement actions against companies that fail to do sufficient due diligence
Putting out joint guidance with the Securities and Exchange Commission that highlights the sanctions risks of mergers and acquisitions
Discouraging mergers and acquisitions in its framework for compliance commitment

Answer(s): B

Explanation:

Sanctions and Compliance Domains outline that OFAC has explicitly emphasized the importance of pre- and post-acquisition sanctions due diligence in mergers and acquisitions. OFAC has pursued enforcement actions against companies that failed to conduct adequate sanctions due diligence or did not integrate compliance controls after acquiring foreign subsidiaries.

OFAC's enforcement history shows cases in which companies inherited violations because they continued business through acquired entities that were already engaged in sanctioned conduct. OFAC clearly identifies failure to conduct sufficient sanctions due diligence as grounds for enforcement. It does not merely "consider" such actions, nor has it issued joint SEC guidance to warn about MandA sanctions risks. OFAC also does not discourage mergers and acquisitions; instead, it stresses compliance integration and strong due diligence.

Reference from Sanctions and Compliance Domains:

OFAC expectations for sanctions due diligence in mergers and acquisitions.

Enforcement actions taken for failure to conduct adequate pre-acquisition and post-acquisition compliance reviews.

Compliance requirements for inherited liabilities through acquired subsidiaries.

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QUESTION: 10

Which variables are most important for sanctions compliance when screening customers with an automated tool? (Select Three.)

Date of birth of a new customer
Location
Name of person
Account number
Employer of an existing customer
Identification number

Answer(s): A,C,F

Explanation:

Sanctions screening systems rely on key personal identifiers to distinguish between true matches and false positives. The Sanctions and Compliance Domains highlight that the most essential variables for screening individuals include name, date of birth, and identification numbers. These identifiers significantly enhance matching accuracy and reduce false positives, especially when screening against common or high-frequency names.

Location, account numbers, and employers are not primary screening variables for matching against sanctions lists. Although these fields may support enhanced due diligence, they are not core identity attributes used for automated sanctions screening.

Reference from Sanctions and Compliance Domains:

Essential identity attributes required for automated sanctions screening.

Use of names, birth dates, and identification numbers to improve match accuracy.

Guidance on minimizing false positives using reliable personal identifiers.

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Free ACAMS CGSS Exam Questions (page: 3)

QUESTION: 6

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QUESTION: 7

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QUESTION: 8

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QUESTION: 9

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QUESTION: 10

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