FIs must haveeffective sanctions screeningprocesses toprevent transactions involving designated persons or entities.
Option A (Correct):Automated screening systemshelp financial institutionsidentify sanctioned individuals, entities, and countries in real time.
Option B (Incorrect):If a customer islisted on a sanctions list, the FImust freeze the account, not simply mark it "high-risk" and continue transactions.
Option C (Incorrect):Prohibited entities should not undergo EDD—transactions with them must beblocked or reported.
Option D (Incorrect):Freezing sanctioned assetsdoes not require board approval; it must bedone immediatelyas per regulations.
Sanctions Compliance Requirements:
Sanctioning Body
Examples of Sanctions Lists
U.S. (OFAC)
Specially Designated Nationals (SDN) List
United Nations (UN)
UN Security Council Sanctions List
European Union (EU)
EU Consolidated Sanctions List
UK (OFSI)
UK Sanctions List
Why Sanctions Screening is Important:
Failing to comply can result in billions in fines (e.g., BNP Paribas paid $8.9 billion in OFAC fines).
Transactions involving sanctioned entities can be blocked, leading to regulatory scrutiny.
Automated screening tools (e.g., SWIFT, World-Check, LexisNexis) improve compliance efficiency.
[Reference:, OFAC Sanctions Compliance Framework, EU Sanctions Regulations, FATF Recommendation 6 (Targeted Financial Sanctions), , , , ]
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