CBP Banking Regulations and Compliance 2 — Questions and Answers
Question 1: Under the Dodd-Frank Act, which agency has primary supervisory authority over non-bank financial companies deemed systemically important?
- Office of the Comptroller of the Currency
- Federal Reserve Board (Correct answer)
- Consumer Financial Protection Bureau
- Federal Deposit Insurance Corporation
Correct answer: Federal Reserve Board
The Federal Reserve Board supervises non-bank financial companies designated as systemically important financial institutions (SIFIs) under Dodd-Frank.
Question 2: A bank's compliance officer discovers a pattern of transactions that may constitute money laundering. Under BSA/AML rules, a Suspicious Activity Report (SAR) must be filed within how many calendar days of initial detection?
- 15 days
- 30 days (Correct answer)
- 45 days
- 60 days
Correct answer: 30 days
FinCEN requires SARs to be filed within 30 calendar days of the date the bank initially detected the suspicious activity.
Question 3: Which regulation implements the Equal Credit Opportunity Act (ECOA) and prohibits discrimination in credit transactions?
- Regulation B (Correct answer)
- Regulation C
- Regulation E
- Regulation Z
Correct answer: Regulation B
Regulation B implements ECOA and prohibits lenders from discriminating against applicants based on protected characteristics.
Question 4: Under the Volcker Rule, banks are prohibited from engaging in which of the following activities?
- Accepting insured deposits
- Proprietary trading in securities (Correct answer)
- Issuing mortgage-backed securities to clients
- Underwriting government securities
Correct answer: Proprietary trading in securities
The Volcker Rule prohibits banks from engaging in short-term proprietary trading of securities, derivatives, and other financial instruments for their own profit.
Question 5: The Community Reinvestment Act (CRA) primarily requires banks to:
- Maintain minimum capital ratios in all communities they serve
- Meet the credit needs of all segments of their communities, including low- and moderate-income areas (Correct answer)
- Offer identical interest rates in all geographic markets
- Disclose fee structures to all borrowers equally
Correct answer: Meet the credit needs of all segments of their communities, including low- and moderate-income areas
The CRA requires banks to help meet the credit needs of all community segments, particularly low- and moderate-income neighborhoods, consistent with safe and sound operations.
Question 6: Which of the following best describes 'know your customer' (KYC) requirements under the Customer Identification Program (CIP)?
- Banks must verify a new customer's creditworthiness before opening any account
- Banks must collect and verify identity information before establishing a customer relationship (Correct answer)
- Banks must perform annual in-person interviews with all business customers
- Banks must share customer identity data with all correspondent banks automatically
Correct answer: Banks must collect and verify identity information before establishing a customer relationship
CIP rules require banks to collect and verify identity information (name, address, date of birth, ID number) before establishing a new customer account.
Question 7: Under Basel III, the Liquidity Coverage Ratio (LCR) requires banks to hold sufficient high-quality liquid assets to survive a stress scenario lasting:
- 7 days
- 14 days
- 30 days (Correct answer)
- 90 days
Correct answer: 30 days
The LCR requires banks to maintain enough high-quality liquid assets to cover total net cash outflows over a 30-day stress period.
CBP Banking Regulations and Compliance 2
Under the Dodd-Frank Act, which agency has primary supervisory authority over non-bank financial companies deemed systemically important?