Exam CRCM topic 1 question 223 discussion

Actual exam question from ABA's CRCM

Question #: 223
Topic #: 1

ABC Co. signed a contract to export goods to Country M, a boycotting country. Payment will be made by a letter of credit confirmed by First National Bank. The letter of credit requires ABC Co. to certify that none of its directors are nationals of any country boycotted by Country M before ABC can be paid. First National
Bank confirms the letter of credit to ABC after determining that all of the documents are in order. Did First National Bank participate in a boycott, and must the bank report the action to the IRS?

A. No. The bank's action was only ministerial.
B. Yes. The action was participation in a boycott and the bank must report the action to the IRS.
C. No. Only ABC Co. is required to report to the IRS.
D. Yes, but no reporting requirements were triggered.

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Suggested Answer: B 🗳️

by Cam22 at March 17, 2024, 1:08 a.m.

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Cam22

4 months ago

Selected Answer: B

The correct answer is B. Yes. The action was participation in a boycott and the bank must report the action to the IRS. By confirming the letter of credit that includes a requirement for ABC Co. to certify compliance with the boycotting country's restrictions, First National Bank is participating in the boycott. U.S. regulations require entities to report actions that may constitute cooperation or participation in an international boycott not sanctioned by the United States, and the IRS is one of the agencies to which such actions must be reported.

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Exam CRCM topic 1 question 223 discussion

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Cam22

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