When must a United States (U.S.) bank block or reject an international funds transfer when there is an Office of Foreign Assets Control designated party to the transaction?
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A. B. C. D.D
In the context of the Certified Anti-Money Laundering Specialist (CAMS) exam question regarding the obligations of a United States (U.S.) bank when dealing with an international funds transfer involving an Office of Foreign Assets Control (OFAC) designated party, the correct answer is:
D. Only if the U.S. bank's correspondent informs it of the involvement of the designated party.
Explanation:
The Office of Foreign Assets Control (OFAC) is an agency of the U.S. Department of the Treasury responsible for enforcing economic and trade sanctions based on U.S. foreign policy and national security goals. OFAC maintains a list of individuals, entities, organizations, and countries subject to various sanctions programs, and these listed entities are commonly referred to as "designated parties."
When a U.S. bank is conducting an international funds transfer, it is obligated to comply with OFAC regulations and screen the transaction for any involvement of designated parties. The bank must ensure that it does not facilitate transactions that could violate U.S. sanctions laws.
In the given question, the correct answer states that a U.S. bank must block or reject an international funds transfer when there is an OFAC designated party involved only if the U.S. bank's correspondent informs it of the involvement of the designated party. This means that the U.S. bank relies on its correspondent, which is typically another financial institution involved in the funds transfer, to provide information regarding the presence of an OFAC designated party.
It is important to note that the other answer choices (A, B, and C) are incorrect:
A. Only if the U.S. bank is involved in the funds transfer: This answer suggests that the U.S. bank should only take action if it is directly involved in the funds transfer. However, U.S. banks have an obligation to screen all international funds transfers, regardless of their direct involvement.
B. Only if a U.S. person or entity is the ultimate beneficiary: This answer is incorrect because the involvement of an OFAC designated party should be considered regardless of the nationality or status of the ultimate beneficiary. OFAC regulations apply to all individuals and entities, not just U.S. persons or entities.
C. Only if a non-U.S. person or entity is the ultimate beneficiary: Similarly, this answer is incorrect because the involvement of an OFAC designated party should be considered regardless of the nationality or status of the ultimate beneficiary. OFAC regulations apply to both U.S. and non-U.S. persons or entities.
In summary, a U.S. bank must block or reject an international funds transfer involving an OFAC designated party only if it receives information from its correspondent regarding the designated party's involvement. The bank relies on its correspondent to provide this information and must comply with OFAC regulations to avoid facilitating transactions that violate U.S. sanctions laws.