CGSS Practice Questions
Prepare for CGSS with more than an answer.
- Exam fee
- $1995 USD
- Level
- Specialist
- Valid for
- 3 years
Domains covered on the exam 5
- Governance and Enforcement25%
- Sanctions Evasion Techniques17.5%
- Sanctions Due Diligence20%
- Sanctions Screening20%
- Sanctions Investigations and Asset Freezing17.5%
- 1
Case Study: GlobalBank is upgrading its sanctions screening filters. The IT team suggests implementing a 'Good Guy' or 'Whitelist' feature to reduce false positives. The Compliance Manager agrees but insists on strict governance.
Which of the following represents a critical best practice for managing a Sanctions Whitelist?
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Correct answer: B
Whitelists are dangerous if not managed. A 'good' client today could be sanctioned tomorrow. Best practice dictates that whitelisted entities must be periodically re-screened or the whitelist itself must be screened against list updates to ensure no 'Good Guy' has become a 'Bad Guy'.
- 2
True or False: Under the EU Blocking Statute, EU persons are generally prohibited from complying with the extraterritorial effects of certain US sanctions, unless they obtain a specific authorization to do so.
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Correct answer: A
This is True. The EU Blocking Statute (Council Regulation (EC) No 2271/96) prohibits EU operators from complying with specified foreign (US) extraterritorial sanctions laws to protect EU sovereignty. Compliance is only allowed if non-compliance would seriously damage their interests, requiring specific authorization.
- 3
A compliance analyst identifies a potential sanctions match on an incoming SWIFT MT103 message. The beneficiary bank is located in a high-risk jurisdiction.
Which field in the MT103 message is most critical to screen to identify the ultimate ordering customer (originator) if the payment has been sent via a cover method?
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Correct answer: B
Field 50K (or 50A/F) contains the Ordering Customer (Originator) information. In a serial payment or cover payment, this field identifies who initiated the funds. Screening Field 50 is essential to ensure the originator is not sanctioned.
- 4
A global bank headquartered in London is reviewing a transaction involving a French manufacturing client. The client is exporting mining equipment to a company in a country subject to US comprehensive sanctions. The transaction is denominated in Euros and does not involve any US persons or the US financial system. However, the French client is 45% owned by a US private equity firm. Based on OFAC regulations and the concept of 'facilitation,' which statement accurately reflects the compliance risk?
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Correct answer: D
Under OFAC regulations, 'facilitation' prohibits US persons from approving, financing, facilitating, or guaranteeing a transaction by a foreign person where the transaction would be prohibited if performed by a US person. If US board members participate in the approval, they violate the facilitation clause, even if the entity itself is not a US person (owning less than 50%).
- 5
A compliance officer is calculating the beneficial ownership of 'Company X' to determine if it is blocked under the OFAC 50% Rule.
Ownership Structure:
- Sanctioned Individual A owns 20% of Company X.
- Sanctioned Entity B owns 20% of Company X.
- Non-Sanctioned Individual C owns 15% of Company X.
- Company Y (which is 60% owned by Sanctioned Individual A) owns 15% of Company X.
Calculate the total sanctioned ownership interest in Company X.
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Correct answer: C
Total sanctioned interest = Direct ownership + Indirect ownership via blocked entities.
- Individual A (Sanctioned) = 20%
- Entity B (Sanctioned) = 20%
- Company Y is blocked because Individual A owns 60% (>50%). Therefore, Company Y's 15% stake in Company X counts as sanctioned interest.
Total = 20% + 20% + 15% = 55%. Since 55% ≥ 50%, Company X is blocked.graph TD A[Sanctioned Ind A] -->|20%| X[Company X] B[Sanctioned Ent B] -->|20%| X A -->|60%| Y[Company Y] Y -->|15%| X style X fill:#f9f,stroke:#333,stroke-width:4px style Y fill:#f9f,stroke:#333,stroke-width:4px
- 6
Which of the following scenarios best describes a 'U-Turn' transaction that was historically permitted for Iran but is now generally prohibited for most US sanctions programs?
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Correct answer: D
A U-Turn transaction involves funds moving from a foreign bank, through a US bank (for clearing), to another foreign bank, for the benefit of a sanctioned party. While historically allowed for Iran under specific conditions (revoked in 2008), this mechanism allows USD clearing without a direct US originator or beneficiary. Understanding this concept is critical for identifying evasion attempts.
