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Banking Regulations and Compliance Flashcards

7 cards from real Banking Exam practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

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  1. Under the Community Reinvestment Act (CRA), banks are primarily evaluated on their efforts to meet the credit needs of which population?

    Answer: Low- and moderate-income communities

    The CRA requires banks to help meet the credit needs of all communities they serve, with particular emphasis on low- and moderate-income neighborhoods.

  2. Which federal agency is primarily responsible for enforcing the Bank Secrecy Act (BSA)?

    Answer: Financial Crimes Enforcement Network (FinCEN)

    FinCEN, a bureau of the U.S. Treasury Department, is the primary administrator and enforcer of the Bank Secrecy Act.

  3. What is the primary purpose of a Suspicious Activity Report (SAR)?

    Answer: To notify regulators of potential money laundering or fraud

    SARs are filed with FinCEN to alert law enforcement to transactions that may involve money laundering, fraud, or other financial crimes.

  4. The Volcker Rule, part of the Dodd-Frank Act, prohibits banks from engaging in which activity?

    Answer: Proprietary trading for their own profit

    The Volcker Rule restricts banks from making speculative investments (proprietary trading) that do not benefit their customers.

  5. Under Regulation E, what is the maximum liability for a consumer who reports an unauthorized electronic fund transfer within 2 to 60 days after receiving a statement?

    Answer: $500

    Regulation E limits consumer liability to $500 if the unauthorized transfer is reported between 2 and 60 days after the periodic statement is sent.

  6. Which Basel III requirement specifies the minimum ratio of high-quality liquid assets a bank must hold?

    Answer: Liquidity Coverage Ratio (LCR)

    The Liquidity Coverage Ratio requires banks to hold sufficient high-quality liquid assets to cover net cash outflows over a 30-day stress period.

  7. What does CAMELS stand for in the context of bank regulatory ratings?

    Answer: Capital, Assets, Management, Earnings, Liquidity, Sensitivity

    CAMELS is a supervisory rating system where each letter represents a key area of bank performance: Capital adequacy, Assets, Management, Earnings, Liquidity, and Sensitivity to market risk.