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CAFP: Sanctions, Embargoes, and Screening (OFAC, UN, EU, and Other Regimes)

CAFP · Work through your exam, one topic at a time.

All guide sections

Sanctions, Embargoes, and Screening (OFAC, UN, EU, and Other Regimes)

What the exam tests

This domain tests sanctions screening: who publishes lists, what is prohibited, how ownership rules work, and how to handle matches. Expect questions distinguishing sanctions from AML, and OFAC from UN/EU regimes.

Core rules and concepts

  • Sanctions are legal restrictions imposed to change behaviour, not merely to detect crime. OFAC administers US sanctions, including the SDN List and sectoral sanctions. The UN Security Council publishes consolidated sanctions lists; the EU publishes restrictive measures; the UK uses OFSI. Lists differ, so screening must cover the applicable regimes.
  • US persons and US-origin goods must comply with OFAC. Secondary sanctions can reach non-US persons for certain activities. The 50% rule: an entity owned 50% or more, directly or indirectly, by one or more blocked persons is itself blocked, even if not named.
  • Screening should cover customers, beneficial owners, counterparties, directors and payment fields. Fuzzy matching creates false positives; investigators must document resolution. Real-time screening is common for payments; batch screening for onboarding and list updates.
  • Blocked property must be frozen and reported to OFAC, generally within 10 business days. Rejected transactions are different from blocked transactions; do not return blocked funds to the originator.
  • Sanctions are generally strict liability in the US; intent is not required for a violation.

Worked example

A bank processes a payment to a trading company in a permitted jurisdiction. Screening does not name the company, but ownership research shows it is 60% owned by an SDN. Under the 50% rule, the company is blocked. The bank must block the payment, report to OFAC and not facilitate the transaction. Reasoning: ownership, not just naming, determines blocking; aggregate indirect ownership counts.

Traps that cost marks

Do not screen only the customer name and ignore beneficial owners. Do not assume the EU list and OFAC list are identical. Do not treat a false positive as a match without investigation. Do not unblock funds without authorisation. Do not confuse sanctions screening with suspicious activity monitoring; both are required but serve different purposes.