Ethics in Banking Flashcards
7 cards from real Banking practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Ethics in Banking flashcards as text
What is the main ethical concern with cross-selling financial products to bank customers?
Answer: Products may be pushed on customers who do not need or understand them
Cross-selling becomes unethical when employees prioritize sales targets over customers' actual needs, potentially resulting in unsuitable products being sold.
A bank's compliance officer learns that management is pressuring underwriters to ignore certain risk flags to close more deals. The officer's primary ethical obligation is to:
Answer: Escalate the matter to the board's audit committee and, if necessary, to regulators
Compliance officers have a duty to escalate systemic risk management failures to the board and, if unaddressed, to regulators to protect the institution and the public.
What is 'greenwashing' in the context of banking ethics?
Answer: Falsely marketing financial products as environmentally sustainable
Greenwashing occurs when banks or funds misrepresent the environmental credentials of their products or portfolios to attract ESG-conscious investors.
A bank's foreign correspondent banking relationship is discovered to be facilitating transactions for a sanctioned country. The bank's primary obligation is to:
Answer: Terminate the relationship and file reports with OFAC and FinCEN as required
Banks are required to terminate relationships that violate OFAC sanctions and file required reports; continuing such relationships exposes the bank to severe penalties.
Which of the following best describes the purpose of the Community Reinvestment Act (CRA) from an ethical standpoint?
Answer: To ensure banks serve the credit needs of all communities, including low-income ones
The CRA was enacted to combat redlining by requiring banks to meet the credit needs of the communities they serve, including low- and moderate-income neighborhoods.
What is a 'blind trust' and when is it used in banking ethics?
Answer: An arrangement where an executive's assets are managed independently to avoid conflicts of interest
A blind trust places an individual's assets under independent management so the owner has no knowledge of or control over specific investments, eliminating conflicts of interest.
If a bank discovers a data breach that exposes customer financial information, what is the ethical and regulatory obligation?
Answer: Notify affected customers and regulators within required timeframes
Federal and state laws require timely notification to both affected customers and regulators after a data breach, and ethically customers deserve to know so they can protect themselves.