Which are common misconceptions related to an effective sanctions program? (Select Two.)

These two statements represent significant and common misunderstandings of how sanctions regimes operate. Sanctions risk extends beyond entities explicitly named on a list. For example, under OFAC's 50 Percent Rule, any entity owned 50 percent or more by one or more blocked persons is itself considered blocked, regardless of whether it appears on a sanctions list. This makes statement (C) a dangerous misconception. Furthermore, the jurisdiction of sanctions regimes, particularly that of the United States, is broad. US sanctions apply to all "U.S. persons," a term that includes U.S. citizens and permanent resident aliens, no matter where they are located or working in the world. Therefore, the belief that a US citizen in the EU is exempt (E) is incorrect.

A. This is a correct statement, not a misconception. USD transactions, even between non-US parties, typically clear through the US financial system, creating a jurisdictional nexus for US sanctions.
B. This is a correct statement, not a misconception. Trade, including import and export activities and related financing, is a primary area of focus for sanctions enforcement.
D. This is a correct statement, not a misconception. Conducting sanctions risk assessments during M&A due diligence is a critical best practice and a regulatory expectation to avoid inheriting liability.

1. ACAMS Certified Global Sanctions Specialist (CGSS) Study Guide, 6th Edition.

For Answer C: Chapter 4, "Sanctions Due Diligence and Evasion," explains the OFAC 50 Percent Rule, stating that "an entity that is owned, directly or indirectly, 50 percent or more by one or more blocked persons is itself considered to be a blocked person," even if not listed. This directly refutes the misconception in option C.

For Answer E: Chapter 2, "The Sanctions Landscape and Core Sanctions Regimes," defines the scope of US jurisdiction. It clarifies that "U.S. persons" include "any United States citizen, permanent resident alien...wherever located," confirming that a US citizen's location does not exempt them from US sanctions.

2. U.S. Department of the Treasury, Office of Foreign Assets Control (OFAC). "Revised Guidance on Entities Owned by Persons Whose Property and Interests in Property are Blocked." (August 13, 2014).

This official guidance document is the primary source for the 50 Percent Rule, explicitly stating that property of entities owned 50 percent or more by blocked persons is blocked, regardless of whether the entity itself is on the Specially Designated Nationals (SDN) List. This supports the reasoning that option C is a misconception.

3. Code of Federal Regulations, Title 31, Chapter V.

The various sanctions regulations published by OFAC, such as 31 C.F.R. § 515.329, consistently define "person subject to the jurisdiction of the United States" or "U.S. person" to include any U.S. citizen, wherever located. This legal foundation confirms that option E is a misconception.