CEA Regulatory Compliance & Legal Ethics Flashcards

What is the primary distinction between legal compliance and ethical conduct in a US business context?

Answer: Ethical conduct sets a higher standard than the law and guides behavior in situations the law does not cover

Laws establish minimum standards, while ethics often demands more — acting with integrity even when the law permits less.

Under the Sarbanes-Oxley Act (SOX), which requirement directly supports ethical financial reporting?

Answer: CEO and CFO personal certification of the accuracy of financial statements

SOX requires top executives to personally certify financial statements, creating direct accountability for honest reporting.

What does the Foreign Corrupt Practices Act (FCPA) primarily prohibit for US companies?

Answer: Paying bribes to foreign government officials to obtain or retain business

The FCPA makes it illegal for US companies and their agents to bribe foreign government officials for business advantage.

In ethics terms, what is 'regulatory capture'?

Answer: The process by which regulated industries gain undue influence over the agencies meant to oversee them

Regulatory capture undermines public interest when the regulator prioritizes industry interests over the mission to protect the public.

Which US federal law requires financial institutions to maintain ethics-based programs to detect and prevent money laundering?

Answer: Bank Secrecy Act (BSA)

The Bank Secrecy Act mandates anti-money laundering programs, recordkeeping, and suspicious activity reporting to combat financial crimes.

How does the Dodd-Frank Act incentivize ethical whistleblowing in the financial sector?

Answer: By providing financial awards and anti-retaliation protections to individuals who report securities violations to the SEC

Dodd-Frank's whistleblower program rewards individuals with 10-30% of sanctions over $1 million, while protecting them from employer retaliation.