Certified Regulatory Compliance Manager (CRCM) — Question 208

First National Bank advises Country A, a boycotting country, on various U.S. investments. Country A instructs First National Bank not to recommend for investment any shares of certain blacklisted companies. First National Bank follows this instruction. Has First National Bank participated or cooperated in an international boycott under the IRS regulations by this action?

Answer options

• A. Yes. The companies are the subject of a boycott.
• B. No. The bank may agree not to recommend certain companies.
• C. Yes, if the companies are part of a boycott.
• D. No, but the bank must report this action to the IRS.

Correct answer: B

Explanation

The correct answer is B because First National Bank is simply following the instructions of Country A without actively participating in or supporting the boycott. The other options incorrectly suggest that the bank's actions constitute participation in a boycott or require reporting, which is not the case when the bank is only complying with a client's request.