CBA Regulatory Compliance Audits 2 — Questions and Answers
Question 1: Under the Bank Secrecy Act (BSA), what is the minimum threshold that triggers a Currency Transaction Report (CTR) filing requirement?
- $5,000
- $10,000 (Correct answer)
- $25,000
- $50,000
Correct answer: $10,000
The BSA requires financial institutions to file a CTR for any cash transaction exceeding $10,000 in a single business day.
Question 2: Which regulatory framework specifically governs the Community Reinvestment Act (CRA) examination process for large banks?
- OCC Handbook Section 12 CFR 25
- Federal Reserve Regulation B
- FDIC Part 345 of Title 12
- All of the above depending on the chartering authority (Correct answer)
Correct answer: All of the above depending on the chartering authority
CRA regulations are implemented by the OCC (12 CFR 25), Federal Reserve (12 CFR 228), and FDIC (12 CFR 345), each governing their respective supervised institutions.
Question 3: When auditing HMDA compliance, what is the primary purpose of the Loan Application Register (LAR)?
- To track loan officer performance metrics
- To record and report data on mortgage applications for fair lending analysis (Correct answer)
- To document collateral valuations for each application
- To maintain a log of declined applications for internal appeals
Correct answer: To record and report data on mortgage applications for fair lending analysis
The HMDA LAR captures demographic and loan data to allow regulators and the public to assess whether banks are serving housing needs without discriminatory patterns.
Question 4: An auditor discovers that a bank's OFAC screening system did not flag a transaction with a party whose name closely resembles but does not exactly match a Specially Designated National (SDN). What is the auditor's most appropriate conclusion?
- No finding because an exact match is required for OFAC compliance
- A potential deficiency in the bank's fuzzy-matching or name-screening logic (Correct answer)
- A critical violation requiring immediate SAR filing
- Evidence of willful non-compliance requiring regulatory notification
Correct answer: A potential deficiency in the bank's fuzzy-matching or name-screening logic
OFAC guidance requires screening to catch close name variants and aliases, so failure to match near-matches indicates a gap in screening logic.
Question 5: Under Regulation O, which of the following transactions with bank insiders is NOT generally prohibited?
- Loans to executive officers at preferential interest rates
- Extensions of credit to directors on the same terms offered to the general public (Correct answer)
- Overdraft privileges for directors not available to other customers
- Loans to principal shareholders above applicable lending limits
Correct answer: Extensions of credit to directors on the same terms offered to the general public
Regulation O permits extensions of credit to insiders provided they are made on substantially the same terms as those offered to non-insiders.
Question 6: A bank's compliance audit reveals that mortgage servicing disclosures required under RESPA Section 6 were sent 15 days after loan servicing transfer. What is the regulatory requirement that was violated?
- Notices must be sent at least 15 days before the effective transfer date (Correct answer)
- Notices must be sent within 3 business days of transfer completion
- Notices must be sent at least 30 days before and 15 days after transfer
- Notices must be sent within 5 business days prior to transfer
Correct answer: Notices must be sent at least 15 days before the effective transfer date
RESPA Section 6 requires the transferor servicer to send a notice at least 15 days before the effective date of the transfer of loan servicing.
Question 7: Which examination procedure best tests a bank's compliance with the Fair Debt Collection Practices Act (FDCPA) as applied to third-party debt collectors the bank has engaged?
- Reviewing the bank's general ledger for collection expense line items
- Auditing contracts with collection agencies and monitoring complaint logs for FDCPA-related issues (Correct answer)
- Testing the bank's internal loan workout procedures only
- Confirming that the bank has filed UCC financing statements for all charged-off loans
Correct answer: Auditing contracts with collection agencies and monitoring complaint logs for FDCPA-related issues
Auditing third-party contracts and tracking consumer complaints is the most direct way to assess whether engaged collectors are operating within FDCPA boundaries.
CBA Regulatory Compliance Audits 2
Under the Bank Secrecy Act (BSA), what is the minimum threshold that triggers a Currency Transaction Report (CTR) filing requirement?