Free CGSS sample questions

Correct answer: The transaction presents a risk if the US private equity firm representatives on the French company's board participate in the decision-making process for this specific deal.

Under OFAC regulations, 'facilitation' prohibits US persons from approving, financing, facilitating, or guaranteeing a transaction by a foreign person where the transaction would be prohibited if performed by a US person. If US board members participate in the approval, they violate the facilitation clause, even if the entity itself is not a US person (owning less than 50%).

Correct answer: 55% (Company X IS blocked)

Total sanctioned interest = Direct ownership + Indirect ownership via blocked entities. 1. Individual A (Sanctioned) = 20% 2. Entity B (Sanctioned) = 20% 3. Company Y is blocked because Individual A owns 60% (>50%). Therefore, Company Y's 15% stake in Company X counts as sanctioned interest. Total = 20% + 20% + 15% = 55%. Since 55% ≥ 50%, Company X is blocked. graph TD A[Sanctioned Ind A] -->|20%| X[Company X] B[Sanctioned Ent B] -->|20%| X A -->|60%| Y[Company Y] Y -->|15%| X style X fill:#f9f,stroke:#333,stroke-width:4px style Y fill:#f9f,stroke:#333,stroke-width:4px

Correct answer: A transaction originating outside the US, clearing through a US correspondent bank, and terminating outside the US, for the benefit of a sanctioned jurisdiction.

A U-Turn transaction involves funds moving from a foreign bank, through a US bank (for clearing), to another foreign bank, for the benefit of a sanctioned party. While historically allowed for Iran under specific conditions (revoked in 2008), this mechanism allows USD clearing without a direct US originator or beneficiary. Understanding this concept is critical for identifying evasion attempts.

Correct answer: High volume of False Negatives

Exact match configuration requires the name to be identical character-for-character. It fails to catch variations, misspellings, or transliteration differences (e.g., 'Mohammad' vs 'Mohammed'), leading to False Negatives where sanctioned entities slip through undetected. Best practice requires 'Fuzzy Matching'.

Correct answer: Reject the transaction and return the funds to the sender.

Sectoral Sanctions (SSI List) typically prohibit specific types of transactions (like dealing in new debt > X days) but do NOT block the entity's assets entirely. Unlike SDN list matches which require blocking (freezing), transactions violating sectoral constraints are generally 'Rejected' (returned), provided the entity is not also on the SDN list.

Correct answer: The US relies heavily on the 50% ownership rule (aggregate), while the EU places equal or greater emphasis on 'control' even if ownership is below 50%.

While the US (OFAC) uses the 50% Rule (aggregating ownership), it generally does not treat entities controlled (but not owned 50%+) by SDNs as automatically blocked by operation of law (though they advise caution). The EU explicitly considers entities 'controlled' by a sanctioned person as subject to asset freezes, regardless of the specific ownership percentage.