A foreign bank's compliance officer receives a request for information from a US bank, alerting the foreign bank to the possibility that it may have transferred funds on behalf of an Office of Foreign Assets Control (OFAC)-sanctioned person, who holds an account with the foreign bank. Which statements are true with respect to said funds and the information in relation to the transaction under scrutiny? (Choose two.)
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A. B. C. D. E.BD
The correct answers to this question are B and D.
B. The USA PATRIOT Act authorizes the Secretary of the Treasury or the Attorney General to subpoena records from the foreign bank that maintains a correspondent account with a US bank.
Under the USA PATRIOT Act, the US authorities can subpoena records from any foreign bank that maintains a correspondent account with a US bank. A correspondent account is an account that a foreign bank opens with a US bank to facilitate its transactions in US dollars or other US-based currencies. Therefore, if the foreign bank that received the request for information from the US bank maintains a correspondent account with a US bank, the US authorities can subpoena the records of that account to investigate the transaction.
D. If the funds are seized, then the foreign bank would be within its rights to dispute such seizure.
If the US authorities determine that the transaction in question involved funds that were transferred on behalf of an OFAC-sanctioned person or entity, they may seize those funds. However, the foreign bank would be within its rights to dispute such seizure if they believe that the funds were not in violation of OFAC sanctions. The foreign bank may need to provide evidence to support their claim, and the US authorities would make a determination based on the evidence presented.
A. US authorities are only permitted to seize the funds transferred by the foreign bank under OFAC sanctions if there is an equivalent sanctions regime of the UN which has been contravened.
This statement is incorrect. The US authorities can seize funds that were transferred on behalf of an OFAC-sanctioned person or entity regardless of whether there is an equivalent sanctions regime of the UN that has been contravened. The OFAC is responsible for administering and enforcing US economic and trade sanctions programs against targeted foreign countries, entities, and individuals.
C. If a US citizen were part of the foreign bank's Board deliberations where a decision was made to onboard the OFAC-sanctioned entity as a client, then they can be confronted with criminal charges.
This statement is also incorrect. While it is important for the foreign bank's compliance officer to investigate whether any US citizens were involved in the decision-making process to onboard an OFAC-sanctioned entity as a client, there is no indication that any criminal charges would be brought against a US citizen solely for participating in such board deliberations.
E. US authorities have no power (in terms of the PATRIOT Act) to sanction the foreign bank for transferring funds on behalf of an OFAC-sanctioned entity.
This statement is also incorrect. The USA PATRIOT Act provides the US authorities with broad powers to sanction foreign banks that are involved in money laundering or terrorist financing activities, including transferring funds on behalf of an OFAC-sanctioned entity. The US authorities can impose sanctions on the foreign bank by restricting or prohibiting its access to the US financial system or freezing its assets held in the US.