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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 Truth in Lending Act (TILA), what must lenders disclose using the Annual Percentage Rate (APR)?

    Answer: The true cost of credit including fees and interest

    TILA requires lenders to disclose the APR, which reflects the total cost of borrowing including interest and fees, enabling consumers to compare loan offers.

  2. A bank's Tier 1 capital under Basel III primarily consists of which components?

    Answer: Common equity and retained earnings

    Tier 1 capital, the core measure of a bank's financial strength, primarily consists of common equity (common stock) and retained earnings.

  3. Which regulation prohibits banks from discriminating in credit transactions based on race, color, religion, national origin, sex, marital status, or age?

    Answer: Regulation B (Equal Credit Opportunity Act)

    Regulation B implements the Equal Credit Opportunity Act, which prohibits creditors from discriminating against applicants based on protected characteristics.

  4. What is the primary function of the Consumer Financial Protection Bureau (CFPB)?

    Answer: Supervising and enforcing consumer financial protection laws

    The CFPB, created by the Dodd-Frank Act in 2010, is responsible for enforcing federal consumer financial protection laws and regulating financial products.

  5. Under the Bank Secrecy Act, a Currency Transaction Report (CTR) must be filed for cash transactions exceeding what threshold?

    Answer: $10,000

    Banks must file a CTR with FinCEN for any cash transaction exceeding $10,000 in a single business day.

  6. Which risk is specifically addressed by stress testing requirements under Dodd-Frank?

    Answer: Systemic risk from large adverse economic scenarios

    Dodd-Frank stress testing (DFAST) requires large banks to assess their capital adequacy under severely adverse economic scenarios to ensure systemic stability.

  7. What does 'know your customer' (KYC) compliance primarily require banks to do?

    Answer: Verify customer identity and assess money laundering risk

    KYC programs require banks to verify customer identities, understand the nature of customer relationships, and assess ongoing money laundering and terrorism financing risks.