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.
Read the first 7 Banking Regulations and Compliance flashcards as text
Under the Gramm-Leach-Bliley Act (GLBA), what must financial institutions provide to customers regarding their privacy policies?
Answer: Annual privacy notices explaining information sharing practices
The GLBA requires financial institutions to provide customers with annual privacy notices describing what information is collected and how it may be shared with third parties.
Which regulation governs the availability of funds deposited into bank accounts and limits how long banks can place holds on checks?
Answer: Regulation CC
Regulation CC implements the Expedited Funds Availability Act, setting maximum hold periods for deposited checks and requiring disclosure of funds availability policies.
What is the primary purpose of the Net Stable Funding Ratio (NSFR) under Basel III?
Answer: Ensure banks have stable funding over a one-year horizon
The NSFR requires banks to maintain stable funding sources relative to their assets over a one-year period to reduce long-term liquidity risk.
An examiner finds that a bank's BSA/AML program lacks adequate independent testing. Under which BSA/AML program pillar does this deficiency fall?
Answer: Independent testing (audit)
The four pillars of a BSA/AML compliance program are: policies and procedures, a designated BSA officer, employee training, and independent testing—the audit function that identifies program gaps.
Which federal law requires banks to establish programs to verify the identity of customers opening new accounts?
Answer: The Patriot Act's Customer Identification Program (CIP) rules
Section 326 of the USA PATRIOT Act requires banks to implement Customer Identification Programs to verify the identity of individuals opening accounts.
Under the Dodd-Frank Act's 'orderly liquidation authority,' which agency has the power to seize and wind down a failing systemically important financial institution?
Answer: Federal Deposit Insurance Corporation (FDIC)
Dodd-Frank grants the FDIC resolution authority to manage the orderly liquidation of failing systemically important financial institutions to prevent broader financial system collapse.
Which scenario best illustrates a 'beneficial ownership' compliance requirement under FinCEN rules?
Answer: A bank identifying natural persons who own 25% or more of a legal entity customer
FinCEN's beneficial ownership rule requires banks to identify and verify the natural persons who own 25% or more of legal entity customers to prevent use of shell companies for illicit purposes.