American Bankers Association CRCM Exam - Topic 2 Question 20 Discussion

Question

ABC Co. signs a contract to export goods to Country G, a boycotting country. Payment will be made by a letter of credit confirmed by First National Bank. The letter of credit requires the goods to be shipped on a ship eligible to enter the port of Country G in conformity with its laws and regulations and that the insurer of the goods has an agent in Country G. Country G's laws prohibit blacklisted ships from calling at its ports and blacklisted insurance companies from qualifying agents in Country G. First National Bank confirms the letter of credit. Did the bank's action constitute an agreement to participate in or cooperate with an international boycott, and is it subject to IRS reporting requirements?

Dulce · Accepted Answer

A) Yes. The action is an agreement to cooperate with or participate in a boycott and, yes, it is subject to the reporting requirements.

Dulce · Answer

B) Yes. The action is an agreement to participate in a boycott but no, it is not subject to the reporting requirements.

Dulce · Answer

C) No. Because the bank is not responsible for knowing the laws of Country G, it is not in participation with or in cooperation with a boycott.

Dulce · Answer

D) No. The confirmation of a letter of credit is not sufficient to be in participation or cooperation with a boycott.