Chief Compliance Officers Course (CCO) Practice Questions And Answers

The present state of international law in the recently published Max Planck Encyclopedia of Public International Law (MPEPIL) furnishes evidence that States and international organs, including the UNSC, must refrain from adopting unilateral coercive measures that have negative effect on the basic means of survival.

This will be demonstrated on the basis of the following scheme:
• Reality of international law;
• Impact of international human rights law;
• Immunity of esc-rights to economic sanctions;
• Right to impose economic sanctions; and
• Human rights limits.

In assessing the immunity of esc-rights to economic sanctions, one should not overlook:
• The ambiguity of democracy as a human right;
• The proclamation of a state of necessity in economic crises; or
• The right to social security.

In addition to providing a pre-sanctions reference point for humanitarian conditions, a baseline study helps to identify:

• Reliable informants and information sources, and weaknesses and gaps in existing information;

• Problems and inconsistencies among multiple information sources and begin the process of triangulation to validate data sources;

• Vulnerable groups in the society and anticipate how sanctions will exacerbate their preexisting vulnerability;

• Likely areas where sensitive indicators of change in humanitarian conditions can be found;

• The existing capacity for information collection and the needs and opportunities to strengthen it;

• The frequency with which ongoing assessments should be carried out.

The shift towards more targeted sanctions in the late 1990s has highlighted four categories of sanctions that will most likely be applied in the future
(1) arms embargoes
(2) financial sanctions
(3) travel-related sanctions
(4) targeted trade sanctions

The ICTY Appeals Chamber has identified several factors in determining whether an attack is directed at a civilian population, including:
(1) the means and method used in the course of the attack;
(2) the status of the victims;
(3) the number of victims;
(4) the nature of the crimes committed in the course of the attack;
(5) the resistance to the assailants at the time and the extent to which the attacking force may be said to have complied or attempted to comply with the precautionary requirements of the laws of war.

Dealing with economic resources generally means using the economic resources to obtain funds, goods, or services in any way, including, but not limited to, by selling, hiring or mortgaging them.

EU regulations require natural and legal persons, entities and bodies to supply OFSI as soon as practicable with any information that would ‘facilitate compliance’ with the regulations.

Any information provided will only be used for the purposes for which it was provided or received.

This requirement applies to natural and legal persons, entities and bodies in the UK or under UK jurisdiction and not just to credit or financial institutions or to individuals working for them.

In certain circumstances, the UK can impose its own financial sanctions and restrictions under the following legislation (collectively the ‘domestic regimes’):
• Terrorist Asset-Freezing etc. Act 2010 (TAFA 2010)
• Counter Terrorism Act 2008 (CTA 2008)
• Anti-Terrorism, Crime and Security Act 2001 (ATCSA 2001)

Three types of studies are frequently used to gather original data on humanitarian conditions: cross-sectional studies, panel studies and longitudinal studies.

A better approach than a cross-sectional study is a panel study, where cross-sections are taken periodically using a common, systematic method.

Panel studies that do not follow up with the same individuals during each panel have to examine whether the people in different panels are indeed comparable.

Another challenge with panel studies is that they sometimes focus too heavily on collecting information on the outcomes of interest rather than relevant process information.

Panels are good for special studies on subgroups of the population.

The shift towards more targeted sanctions in the late 1990s has highlighted four categories of sanctions that will most likely be applied in the future
(1) arms embargoes
(2) financial sanctions
(3) travel-related sanctions
(4) targeted trade sanctions

Subpoenas are usually issued by grand juries, operating under the purview of a court and empower a law enforcement agency to compel the production of documents and testimony.

If an institution is served with a subpoena compelling the production of certain documents or an individual related to its customer, the institution should have its senior management and/or counsel review the subpoena. If there are no grounds for contesting the subpoena, the institution should take all appropriate measures to comply with the summons or subpoena on a timely and complete basis.

A search warrant is a grant of permission from a court for a law enforcement agency to search certain designated premises and to seize specific categories of items or documents. The warrant is authorized based on information contained in an affidavit submitted by a law enforcement officer. It gives law enforcement agents the right to enter the premises and to look for and seize only certain items or documents. A search warrant is not usually an open-ended demand.

Foreign financial institutions covered by the rule include foreign banks, foreign branches of US banks, foreign businesses that would be considered broker-dealers, futures commission merchants, introducing brokers in commodities, mutual funds if they operate in the US, and money transmitters or currency exchangers organized in a foreign country.

The due diligence program must address three measures:
1. Determining whether enhanced due diligence is necessary.
2. Assessing the money laundering risk presented by the correspondent account.
3. Applying risk-based procedures and controls reasonably designed to detect and report suspected money laundering.

For covered private banking accounts, US institutions must take reasonable steps to:
• Ascertain the identity of all nominal and beneficial owners of the accounts.
• Ascertain whether any such owner is a “senior foreign political figure.”
• Ascertain the source of the funds in the account and the purpose and expected use of the account.
• Monitor the account to ensure the activity in the account is consistent with the information provided as to the source of funds and the purpose and expected use of the account, as needed to guard against money laundering and to report any suspected money laundering or suspicious activity.

Section 319( b): Records relating to Correspondent Accounts for Foreign Banks ( 31 U.S.C. 5318( k)).

Allows the appropriate federal banking agency to require a financial institution to produce within 120 hours (five days) records or information related to the institution’s AML compliance or related to a customer of the institution or any account opened, maintained, administered or managed in the US by the financial institution.

OFAC administers and enforces economic and trade sanctions based on US foreign policy and national security goals against targeted foreign countries, terrorists, international narcotics traffickers and those engaged in activities related to the proliferation of weapons of mass destruction.

Aspects of the industry that increase its exposure to laundering are:

• The speed of the transactions.
• The ease of conversion of holdings to cash without significant loss of principal.
• The competitive, commission-driven environment.