Banking Operations Management Flashcards

A bank's Business Continuity Plan (BCP) is primarily designed to:

Answer: Ensure critical operations can continue during and after a disruptive event

A BCP documents procedures to maintain or rapidly restore essential business functions following disruptions such as natural disasters, cyberattacks, or system failures.

Under the Community Reinvestment Act (CRA), federal regulators assess whether banks are:

Answer: Meeting the credit needs of all segments of their communities, including low- and moderate-income areas

The CRA requires regulators to evaluate whether banks serve the credit needs of their entire communities, including lower-income neighborhoods where they take deposits.

In banking, 'know your customer' (KYC) procedures are most directly associated with:

Answer: Customer identification and due diligence to prevent money laundering

KYC requires banks to verify customer identities, understand the nature of customer relationships, and monitor for suspicious activity as part of AML compliance.

Which document establishes the legal framework governing a bank's relationship with a commercial checking account holder?

Answer: Signature card and deposit account agreement

The signature card identifies authorized signers while the deposit account agreement sets the contractual terms, including fees, overdraft policies, and account rules.

A bank processes an ACH debit entry that the originating company sent in error. The customer's right to return the transaction as 'unauthorized' expires after:

Answer: 60 calendar days

Under NACHA rules, consumers have 60 calendar days from the settlement date to dispute an unauthorized ACH debit by submitting a Written Statement of Unauthorized Debit.

Which banking operations concept describes the practice of netting offsetting payment obligations between two banks before settling only the difference?

Answer: Bilateral netting

Bilateral netting reduces settlement risk and liquidity needs by allowing two counterparties to offset their mutual obligations and settle only the net difference.

A bank teller notices a customer appears nervous and is making multiple cash deposits across different teller windows on the same day. The teller's most appropriate first step is to:

Answer: Alert the BSA/AML officer or compliance team about potential structuring

The teller should report the suspicious behavior to the compliance function, which will evaluate whether a Suspicious Activity Report (SAR) is warranted.