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Regulatory Compliance 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 Regulatory Compliance flashcards as text

  1. What is 'Tier 1 capital' in the context of Basel III bank capital requirements?

    Answer: Core capital including common equity and disclosed reserves

    Tier 1 capital represents a bank's core capital base — primarily common equity Tier 1 (CET1) plus additional Tier 1 instruments — used to absorb losses on a going-concern basis.

  2. Under the Home Mortgage Disclosure Act (HMDA), what must mortgage lenders report?

    Answer: Data on mortgage applications, originations, and purchases including demographic information

    HMDA requires covered lenders to collect and report detailed data on mortgage applications and originations, including applicant demographics, to help identify potential discrimination.

  3. What is the main function of the Financial Crimes Enforcement Network (FinCEN)?

    Answer: Collecting and analyzing financial transaction data to combat money laundering and terrorism financing

    FinCEN is a bureau of the U.S. Treasury Department that collects and analyzes financial transaction reports to support law enforcement efforts against money laundering, terrorism financing, and other financial crimes.

  4. Under the CARD Act of 2009, credit card companies must provide how many days' advance notice before changing key account terms?

    Answer: 45 days

    The Credit Card Accountability Responsibility and Disclosure Act requires card issuers to provide at least 45 days' advance notice before making significant changes to interest rates, fees, or other key terms.

  5. Which of the following best describes 'redlining' in banking?

    Answer: Refusing to provide financial services to residents of certain geographic areas based on race or ethnicity

    Redlining is the discriminatory practice of denying or limiting financial services to specific neighborhoods based on the racial or ethnic composition of those communities.

  6. What does the Consumer Financial Protection Bureau (CFPB) Unfair, Deceptive, or Abusive Acts or Practices (UDAAP) standard prohibit?

    Answer: Consumer financial products or services that harm consumers through unfair, deceptive, or abusive conduct

    UDAAP prohibits financial service providers from engaging in practices that are unfair (cause substantial injury), deceptive (mislead consumers), or abusive (exploit consumers' lack of understanding).

  7. The Flood Disaster Protection Act requires federally regulated lenders to obtain flood insurance for properties in what type of area?

    Answer: Properties located in Special Flood Hazard Areas (SFHAs) identified by FEMA

    Lenders must require flood insurance on improved real estate or mobile homes located in FEMA-designated Special Flood Hazard Areas when originating or renewing federally backed loans.