The 40 Recommendations provide a complete set of countermeasures against money laundering and terrorist financing, covering
* the identification of risks and development of appropriate policies;
* the criminal justice system and law enforcement;
* the financial system and its regulation;
* the transparency of legal persons and arrangements; and
* international cooperation.

According to the Financial Action Task Force (FATF) methodology, financial institutions (FIs) are required to consider filing a suspicious activity report (SAR) in situations where they suspect or have reasonable grounds to suspect that funds are the proceeds of criminal activity or related to terrorist financing. One such situation is when a beneficiary of a transaction is a politically exposed person (PEP). PEPs are individuals who hold prominent public positions or have close associations with such individuals. Their involvement in transactions can raise red flags due to the potential risk of corruption, money laundering, or other illicit activities1.
References:
1. Recommendation 20: Reporting of suspicious transactions

When considering sharing information across the institution or within the same jurisdiction, the key legal issue that poses challenges to sharing customer-related information is data protection and privacy laws. Data protection and privacy laws exist in most countries and can vary significantly from jurisdiction to jurisdiction.
These laws place restrictions on how customer data can be used, shared, and stored, and can limit the ability of financial institutions to share customer-related information with each other. Additionally, these laws may also require financial institutions to take additional steps to ensure the protection of customer data.

According to the Anti-Money Laundering Specialist (the 6th edition) study guide, one of the main challenges of providing on-line services to customers is the verification of theiridentity and the authentication of their transactions1. The lack of face-to-face contact and the use of electronic documents increase the risk of identity fraud, impersonation, and account takeover2. Therefore, financial institutions offering on-line services need to implement robust customer due diligence (CDD) measures, such as using multiple sources of information, verifying biometric data, and applying risk-based monitoring3.
1: CAMS Study Guide, 6th Edition, Chapter 4, Section 4.1, page 103
2: CAMS Study Guide, 6th Edition, Chapter 4, Section 4.2, page 104
3: CAMS Study Guide, 6th Edition, Chapter 4, Section 4.3, page 105

OFAC sanctions apply extraterritoriallyto ensureU.S. financial and economic interests are protected.
Option A (Correct):U.S. citizensmust comply with OFAC sanctionsregardless of where they are located.
Option D (Correct):U.S.-incorporated entities and their foreign branchesare required to followOFAC restrictions.
Option E (Correct):Permanent U.S. resident aliensare subject toOFAC complianceeven outside the U.S.
Option B (Incorrect):Non-U.S. financial institutionsare notdirectly subject to OFACunless they have aU.S.
presenceordeal in USD transactions.
Option C (Incorrect):Selling U.S.-origin goods does not automatically subject merchants to OFAC laws, unless they are in asanctioned jurisdiction.
Reference:OFAC Regulations, U.S. Treasury Guidance on Sanctions Compliance, USA PATRIOT Act Section 311.