NFPA 70E Electrical Safety in the Workplace Certification (NFPA 70E)

Correct: Satellite services, particularly those involving high-resolution imagery (sub-meter) and advanced encryption, often fall under ‘dual-use’ categories. While General Licenses (such as OFAC GL 25C) exist to facilitate the flow of information and telecommunications, they frequently exclude high-end technology, hardware, or services that could provide a military or intelligence advantage to a sanctioned regime. Compliance must ensure that the specific technical specifications of the satellite service do not trigger EAR-related restrictions or specific exclusions within the sanctions regulations before unblocking the funds.

Incorrect: The Berman Amendment and general telecommunications exemptions are not absolute; they do not cover high-technology services or dual-use goods that have significant military applications, such as high-resolution remote sensing. Suggesting the use of nested accounts or third-country intermediaries constitutes ‘circumvention’ or ‘evasion,’ which is a severe violation of sanctions laws. Relying solely on a client’s written attestation without independent verification or a formal license is insufficient due diligence when dealing with high-risk technology in a sanctioned jurisdiction.

Takeaway: Sanctions exemptions for telecommunications do not automatically apply to high-specification satellite services, which must be evaluated against dual-use technology restrictions and specific regulatory thresholds.

Correct: When a systemic deficiency in a sanctions compliance program is identified, such as a screening tool failure, the institution must perform a retrospective review (look-back) to determine if any prohibited transactions actually occurred. This allows the firm to quantify the impact of the failure, identify specific violations, and fulfill its regulatory obligations regarding blocked or rejected transactions.

Incorrect: Implementing a manual review process is a prospective control but does not address the risk already incurred during the previous six months. Submitting a disclosure without first investigating the scope and identifying specific violations is premature and lacks the necessary detail for regulators. Increasing the frequency of independent testing is a good long-term enhancement but is not the immediate priority for remediating the specific risk created by the past configuration error.

Takeaway: Effective remediation of a sanctions compliance failure requires a retrospective analysis to identify and address any actual violations that occurred during the period of the deficiency.

Correct: Under UN Security Council resolutions, particularly those related to terrorism and proliferation financing, member states are required to ensure that financial institutions freeze the assets of designated individuals and entities ‘without delay’ (generally interpreted as within 24 hours). A critical component of this requirement is that the freeze must occur without prior notice to the target to prevent the dissipation or movement of funds before the restriction is in place.

Incorrect: Waiting for local administrative transposition or publication in a gazette is a common cause of non-compliance, as the ‘without delay’ standard requires immediate action upon the UN’s designation. Sanctions obligations are absolute and do not feature de minimis thresholds like AML reporting requirements. Providing notice to a client before a freeze is a violation of the ‘without prior notice’ principle and would likely constitute tipping off or facilitate the evasion of sanctions.

Takeaway: United Nations Security Council sanctions require financial institutions to freeze assets of designated parties without delay and without prior notice to ensure the effectiveness of the global sanctions regime.

Correct: Implementing a risk-based due diligence process is the most effective mitigation strategy because it addresses the lack of transparency in the marketplace’s own screening. By independently screening high-volume vendors and correcting internal procurement codes, the wealth manager ensures that transactions are properly categorized and subjected to the necessary sanctions filters, preventing the circumvention of controls through misclassification.

Incorrect: Relying solely on contractual warranties is insufficient because a firm cannot outsource its ultimate regulatory responsibility to avoid dealing with sanctioned parties. Restricting purchases to domestic marketplaces is based on the false premise that domestic transactions are exempt from sanctions; OFAC regulations apply to all activities of a US person or entity regardless of location. Increasing the screening threshold is a poor risk management practice that increases the likelihood of missing prohibited transactions and does not solve the underlying issue of expense misclassification.

Takeaway: Sanctions compliance for online marketplaces requires a combination of accurate internal transaction classification and independent due diligence of third-party vendors to prevent indirect violations.

Correct: In the platform economy, fintech lenders are responsible for the sanctions risks introduced by their third-party partners. When a control failure is identified, the lender must take immediate action to prevent further risk (suspending onboarding) and perform a ‘look-back’ investigation to identify, block, and report any transactions that violated sanctions regulations during the period of the control failure.

Incorrect: Immediate termination without a look-back investigation is premature and fails to address the regulatory requirement to identify and report specific prohibited transactions that have already occurred. Written attestations are insufficient once a material control failure has been identified. Indemnification clauses provide financial protection but do not absolve the lender of its regulatory obligations or legal liability under sanctions laws.

Takeaway: Fintech lenders must actively manage third-party risk in the platform economy by implementing immediate remedial actions and retrospective reviews when partner screening controls fail.

Correct: According to OFAC’s revised guidance on the 50 Percent Rule, any entity owned in the aggregate, directly or indirectly, 50 percent or more by one or more blocked persons is itself considered a blocked person. In this scenario, the combined ownership of the three SDN-listed entities is 52%, which exceeds the threshold. Therefore, the entity is blocked by operation of law, and the fund administrator must treat it as if it were explicitly named on the SDN list.

Incorrect: The suggestion that the rule only applies to single majority owners is incorrect because OFAC explicitly requires the aggregation of all blocked parties’ interests. The claim that the rule only applies to SSI lists is false, as it is a fundamental principle across OFAC’s blocking programs. The idea that jurisdictional differences between the owners negate the aggregation rule is also incorrect; if the owners are blocked persons under OFAC, their combined interest is what determines the status of the downstream entity.

Takeaway: Under the OFAC 50 Percent Rule, an entity is considered blocked if the aggregate ownership by one or more persons on the SDN list reaches or exceeds 50%.

Correct: Global sanctions regulations, including those from OFAC, apply to digital assets and virtual environments. If an institution identifies a transaction involving an interest of a sanctioned party—including assets previously held by or linked to sanctioned wallet addresses—it must comply with blocking and reporting requirements. Freezing the funds and reporting to the appropriate authority is the mandatory response when a nexus to a sanctioned entity is confirmed, regardless of whether the primary customer is sanctioned.

Incorrect: Filing a SAR is a requirement under Anti-Money Laundering (AML) laws but does not satisfy the specific legal obligation to block or freeze assets under sanctions regimes. Obtaining an affidavit from a customer does not provide a legal safe harbor for processing transactions that involve sanctioned property. Relying on decentralized marketplace administrators is often ineffective due to the pseudonymous nature of DeFi and does not absolve the institution of its immediate duty to prevent the movement of funds linked to sanctioned entities.

Takeaway: Sanctions compliance obligations extend to virtual assets and require immediate blocking and reporting when a nexus to a sanctioned wallet or entity is identified through blockchain forensics.

Correct: In a risk-based approach to CIP, red flags such as recently issued documents from high-risk jurisdictions and name variations require enhanced due diligence (EDD). Requesting secondary identification and performing deeper verification helps ensure that the name variation is not an attempt to obfuscate an identity that might otherwise trigger a match on a sanctions list (e.g., SDN list).

Incorrect: Accepting the document without further investigation ignores significant red flags and fails to address the potential for sanctions evasion. Terminating the relationship and filing a report immediately is premature without first attempting to resolve the discrepancy through EDD. Relying on an expired document is a violation of standard CIP requirements, as identification must be current and valid at the time of account opening.

Takeaway: When CIP processes reveal discrepancies or high-risk indicators like recently issued documents and name variations, firms must apply enhanced due diligence to ensure the applicant is not attempting to bypass sanctions screening.

Correct: The scenario identifies a specific risk related to the physical location of remote workers (geographic risk) and the potential use of VPNs/cloud hosting to mask that location. To mitigate the risk of violating sanctions related to comprehensively sanctioned jurisdictions (like Crimea, Iran, or North Korea), the bank must verify the actual physical location of the worker and use technical controls like geofencing. This aligns with regulatory expectations that firms manage the risk of providing services to or receiving services from individuals in prohibited regions.

Incorrect: Reclassifying workers as employees focuses on labor and tax law rather than addressing the geographic sanctions risk. Contractual indemnification does not absolve a financial institution of its regulatory obligations or potential enforcement actions from bodies like OFAC. Increasing the frequency of name-based screening is a good practice for identifying SDNs, but it does not address the specific risk of a non-sanctioned individual performing work from a prohibited geographic location.

Takeaway: Effective sanctions compliance for remote workers must include verification of physical residency and technical location monitoring to prevent services from being performed in comprehensively sanctioned jurisdictions.