Question 1

Content of notification to credit consumers must contain:

Accepted Answer

A)  Statement of the action taken 
B)  Name and address of creditor 
C)  Statement of the specific reasons for the adverse action or a disclosure of the applicant's right to receive the specific reasons within 30 days of a request. The request for specific reasons must be made within 60 days of the receipt of the adverse action notice. 
D)  Statement of the specific reasons for the adverse action or a disclosure of the applicant's right to receive the specific reasons within 15 days of a request. The request for specific reasons must be made within 30 days of the receipt of the adverse action notice. 
A)  Statement of the action taken 
B)  Name and address of creditor 
C)  Statement of the specific reasons for the adverse action or a disclosure of the applicant's right to receive the specific reasons within 30 days of a request. The request for specific reasons must be made within 60 days of the receipt of the adverse action notice. 
D)  Statement of the specific reasons for the adverse action or a disclosure of the applicant's right to receive the specific reasons within 15 days of a request. The request for specific reasons must be made within 30 days of the receipt of the adverse action notice.

Question 2

A banking agency is conducting a credit needs determination. Which of the following is NOT a criterion used in such a determination?

Accepted Answer

A)  The bank's CRA rating 
B)  Economic conditions, including loan demand in the bank's communities 
C)  Whether the bank was once part of a failed institution 
D)  The bank's profitability ratios 
A)  The bank's CRA rating 
B)  Economic conditions, including loan demand in the bank's communities 
C)  Whether the bank was once part of a failed institution 
D)  The bank's profitability ratios

Question 3

Mills Company, Inc., is a manufacturing company with a working capital line of credit from First National Bank. The credit agreement governing the loan states that Mills cannot obtain additional unsecured credit without the approval of the bank. Mills believes that such a clause violates the Bank Holding Company Act's anti-tying clause. Does it?

Accepted Answer

A)  Yes. It is a restraint of trade. 
B)  Yes, unless the bank will reasonably allow additional credit at Mills's request. 
C)  No, since this clause relates to the soundness of the credit 
D)  No, unless the bank refuses to grant additional credit to Mills itself 
A)  Yes. It is a restraint of trade. 
B)  Yes, unless the bank will reasonably allow additional credit at Mills's request. 
C)  No, since this clause relates to the soundness of the credit 
D)  No, unless the bank refuses to grant additional credit to Mills itself

Question 4

Which of the following loans or applications is EXCLUDED from HMDA reporting?

Accepted Answer

A)  Residential loans purchased on the secondary market 
B)  Loans secured by real estate that are made for purposes other than home purchase, improvement, or refinancing 
C)  Loans on residential property in a flood zone when proof of flood insurance is not provided 
D)  Applications for refinancing when there is no increase in principal 
A)  Residential loans purchased on the secondary market 
B)  Loans secured by real estate that are made for purposes other than home purchase, improvement, or refinancing 
C)  Loans on residential property in a flood zone when proof of flood insurance is not provided 
D)  Applications for refinancing when there is no increase in principal

Question 5

A ____________ must settle for an item with its administrative bank, whether or not it received the item from that bank. Settlement with its administrative bank is deemed to be settlement with the Reserve Bank that sent the item.

Accepted Answer

A)  Paying bank 
B)  Clearing Agent 
C)  Regulation J 
D)  Regulation CC 
A)  Paying bank 
B)  Clearing Agent 
C)  Regulation J 
D)  Regulation CC

Question 6

When completing and filing a SAR, what is the bank NOT required to do?

Accepted Answer

A)  Submit a copy of the supporting documentation with the SAR 
B)  Submit the SAR within 30 days of the initial detection of facts 
C)  Report the SAR information to the bank's board of directors 
D)  Maintain a copy of the SAR and supporting documentation for 5 years 
A)  Submit a copy of the supporting documentation with the SAR 
B)  Submit the SAR within 30 days of the initial detection of facts 
C)  Report the SAR information to the bank's board of directors 
D)  Maintain a copy of the SAR and supporting documentation for 5 years

Question 7

Validation of debt says:

Accepted Answer

A)  Consumer must be sent debt validation in writing within five calendar days of initial communication unless information is contained in initial communication or unless consumer pays the debt 
B)  If consumer disputes a debt in writing within 60 days, all collection activity must stop until the debt is verified 
C)  If consumer disputes a debt in writing within 15 days, all collection activity must stop until the debt is verified 
D)  If a consumer owes multiple debts and makes any multiple payments, debt collector must apply to debt in accordance with the consumer's direction 
A)  Consumer must be sent debt validation in writing within five calendar days of initial communication unless information is contained in initial communication or unless consumer pays the debt 
B)  If consumer disputes a debt in writing within 60 days, all collection activity must stop until the debt is verified 
C)  If consumer disputes a debt in writing within 15 days, all collection activity must stop until the debt is verified 
D)  If a consumer owes multiple debts and makes any multiple payments, debt collector must apply to debt in accordance with the consumer's direction

Question 8

Safety and soundness concerns in FDIC Payday Lending Guidance clearly mention that there should be adequate capital as Minimum capital requirements are not enough to offset the risks of payday loans. Banks should hold capital against its subprime portfolio in amounts:

Accepted Answer

A)  That are 1½ to 5 times greater than normal 
B)  That are 1½ to 3 times greater than normal 
C)  That are 1½ to 3 times lower than normal 
D)  That should be between 2-5 in comparison to normal 
A)  That are 1½ to 5 times greater than normal 
B)  That are 1½ to 3 times greater than normal 
C)  That are 1½ to 3 times lower than normal 
D)  That should be between 2-5 in comparison to normal

Question 9

An error in EFT includes any of the following:

Accepted Answer

A)  An unauthorized EFT 
B)  The omission from a periodic statement of an EFT that should have been included 
C)  A consumer's request for documentation required to be given on receipts or statements or for clarification of information (does not include routine inquiries about account balances) 
D)  All of these 
A)  An unauthorized EFT 
B)  The omission from a periodic statement of an EFT that should have been included 
C)  A consumer's request for documentation required to be given on receipts or statements or for clarification of information (does not include routine inquiries about account balances) 
D)  All of these

Question 10

If a bank is a government securities broker or dealer, what are its responsibilities when it obtains a Form G-FIN-4 or an MSD-4 from an employee?

Accepted Answer

A)  Retain the form for 10 years 
B)  Verify the accuracy of all information on the form 
C)  Verify the accuracy of the information by inquiring of all employers of the employee for the previous three years 
D)  Verify the accuracy of the information by inquiring of all employers of the employee for the previous five years 
A)  Retain the form for 10 years 
B)  Verify the accuracy of all information on the form 
C)  Verify the accuracy of the information by inquiring of all employers of the employee for the previous three years 
D)  Verify the accuracy of the information by inquiring of all employers of the employee for the previous five years

Question 11

Which of the following is NOT a requirement of Regulation F?

Accepted Answer

A)  Writing and maintaining policies and procedures for managing exposure to correspondent banks 
B)  Monitoring the exposure to correspondent banks on a regular basis 
C)  Establishing internal limits on exposure to correspondents 
D)  Providing quarterly reports to the board of directors of compliance audit results 
A)  Writing and maintaining policies and procedures for managing exposure to correspondent banks 
B)  Monitoring the exposure to correspondent banks on a regular basis 
C)  Establishing internal limits on exposure to correspondents 
D)  Providing quarterly reports to the board of directors of compliance audit results

Question 12

First National Bank receives a notice from the IRS to begin withholding 28 percent of the interest payments on the money market savings account of Myra Wilcox because of payee underreporting. What is the most proper action for First National Bank to take?

Accepted Answer

A)  Send a notice to Ms. Wilcox within 15 days of the receipt of the IRS notice and begin withholding; stop withholding if Ms. Wilcox can prove to the bank that she is not underreporting 
B)  Begin withholding and send a notice to Ms. Wilcox within 15 days of beginning the withholding; stop withholding only on written notice from the IRS 
C)  Begin withholding with the first payment after 30 days and send a notice to Ms. Wilcox at least 15 days before the first payment from which funds are to be withheld; stop withholding only on written notice from the IRS 
D)  Send notice to Ms. Wilcox within 15 days of the receipt of the IRS notice and begin backup withholding with the first payment following 30 days after the notice; stop withholding only on written notice from the IRS 
A)  Send a notice to Ms. Wilcox within 15 days of the receipt of the IRS notice and begin withholding; stop withholding if Ms. Wilcox can prove to the bank that she is not underreporting 
B)  Begin withholding and send a notice to Ms. Wilcox within 15 days of beginning the withholding; stop withholding only on written notice from the IRS 
C)  Begin withholding with the first payment after 30 days and send a notice to Ms. Wilcox at least 15 days before the first payment from which funds are to be withheld; stop withholding only on written notice from the IRS 
D)  Send notice to Ms. Wilcox within 15 days of the receipt of the IRS notice and begin backup withholding with the first payment following 30 days after the notice; stop withholding only on written notice from the IRS

Question 13

Unless excluded by a board resolution or the bylaws, the following officers will be considered to be executive officers EXCEPT:

Accepted Answer

A)  Chairman of the board 
B)  President 
C)  Each vice-president and above (for example, senior vice-president, executive vice-president, and so on) 
D)  Brokerage house's vice president 
A)  Chairman of the board 
B)  President 
C)  Each vice-president and above (for example, senior vice-president, executive vice-president, and so on) 
D)  Brokerage house's vice president

Question 14

First National Bank is a municipal securities dealer. Its municipal securities department is supervised by Mary Watkins, a municipal securities principal. The department has five other employees, including two municipal securities representatives. Martin Wells, a commercial loan customer of the bank, tells Ms. Watkins he wants to invest in municipal securities and asks for her help. Mr. Wells has never dealt with the municipal securities department of the bank and has never purchased municipal securities. He wants to purchase the securities today. What should Ms. Watkins do?

Accepted Answer

A)  Determine what he would like to buy and help him buy it 
B)  Help him make the purchase only if she can be assured the transaction meets the MSRB suitability requirements 
C)  Help him make the purchase but avoid making any recommendations or comments about the advisability of the transaction 
D)  Refer him to a municipal securities representative 
A)  Determine what he would like to buy and help him buy it 
B)  Help him make the purchase only if she can be assured the transaction meets the MSRB suitability requirements 
C)  Help him make the purchase but avoid making any recommendations or comments about the advisability of the transaction 
D)  Refer him to a municipal securities representative

Question 15

State National Bank is a $250 million community bank. It makes a variety of consumer and commercial loans, regularly transmits funds via wire transfers for its customers, and issues commercial and stand-by letters of credit. Which of the following transactions can State National make without checking the OFAC SDN list and without incurring liability?

Accepted Answer

A)  Send a wire transfer via its correspondent bank in New York for a commercial customer. 
B)  Sell a cashier's check payable to a third party. 
C)  Cash an on-us check over-the-counter for a noncustomer. 
D)  None. The bank can be liable for all. 
A)  Send a wire transfer via its correspondent bank in New York for a commercial customer. 
B)  Sell a cashier's check payable to a third party. 
C)  Cash an on-us check over-the-counter for a noncustomer. 
D)  None. The bank can be liable for all.

Question 16

Issuing Bank, a foreign bank, maintains an account with First National Bank, a U.S. bank. Issuing Bank issues a letter of credit in favor of ABC, Inc., a U.S. corporation. The letter of credit contains a boycott provision. The letter of credit provides that any negotiating bank may obtain reimbursement from Issuing Bank's account at First National Bank by certifying that the conditions of the letter of credit have been met. Issuing Bank does not send First National Bank a copy of the letter of credit. May First National Bank reimburse negotiating banks for the letter of credit when it contains a boycott provision?

Accepted Answer

A)  Yes. First National Bank did not know of it, so it may reimburse a negotiating bank. 
B)  No. First National Bank is under a duty to determine the underlying conditions of any letter of credit it pays. 
C)  No. First National Bank should request a copy of the letter of credit at the time of its payment and then refuse to pay once it is aware of the provision. 
D)  Yes, provided ABC Company is not a participant in the boycott. 
A)  Yes. First National Bank did not know of it, so it may reimburse a negotiating bank. 
B)  No. First National Bank is under a duty to determine the underlying conditions of any letter of credit it pays. 
C)  No. First National Bank should request a copy of the letter of credit at the time of its payment and then refuse to pay once it is aware of the provision. 
D)  Yes, provided ABC Company is not a participant in the boycott.

Question 17

Payment to a beneficiary is made at the earlier of the time when:

Accepted Answer

A)  The payment order is credited to the beneficiary's account or when notice of the credit is sent to the beneficiary 
B)  The amount is credited to the receiving bank's account at the Reserve Bank or when the payment order is sent to the receiving bank 
C)  The amount is debited to the receiving bank's account at the Reserve Bank or when the payment order is sent to the receiving bank 
D)  The payment order is debited to the beneficiary's account or when notice of the credit is sent to the beneficiary 
A)  The payment order is credited to the beneficiary's account or when notice of the credit is sent to the beneficiary 
B)  The amount is credited to the receiving bank's account at the Reserve Bank or when the payment order is sent to the receiving bank 
C)  The amount is debited to the receiving bank's account at the Reserve Bank or when the payment order is sent to the receiving bank 
D)  The payment order is debited to the beneficiary's account or when notice of the credit is sent to the beneficiary

Question 18

Which of the following transactions requires completion of FinCEN Form 104, a CTR?

Accepted Answer

A)  Deposit of checks totaling $12,000 to a checking account 
B)  Cash purchase of a cashier's check for $7,800 
C)  Cash withdrawal of $3,000 from a checking account 
D)  Cashing of a $14,000 check for a customer 
A)  Deposit of checks totaling $12,000 to a checking account 
B)  Cash purchase of a cashier's check for $7,800 
C)  Cash withdrawal of $3,000 from a checking account 
D)  Cashing of a $14,000 check for a customer

Question 19

Under collateral requirements-12CFR 221.7, maximum loan value of margin stock is:

Accepted Answer

A)  Currently 50 percent of the current market value 
B)  Currently 70 percent of the current market value 
C)  Subject to change by the Federal Reserve 
D)  Subject to change by the Equity Reserve 
A)  Currently 50 percent of the current market value 
B)  Currently 70 percent of the current market value 
C)  Subject to change by the Federal Reserve 
D)  Subject to change by the Equity Reserve

Question 20

Your institution has identified a transaction by an existing depositor that should be blocked under OFAC requirements. The branch manager contacts you for specific instructions. Before reporting the transaction to OFAC, what should the bank do?

Accepted Answer

A)  Reject the transaction 
B)  Process the transaction 
C)  Close the customer's account 
D)  Place the funds in an interest-bearing account 
A)  Reject the transaction 
B)  Process the transaction 
C)  Close the customer's account 
D)  Place the funds in an interest-bearing account

Content of notification to credit consumers must contain:

A banking agency is conducting a credit needs determination. Which of the following is NOT a criterion used in such a determination?

Which of the following loans or applications is EXCLUDED from HMDA reporting?

A ____________ must settle for an item with its administrative bank, whether or not it received the item from that bank. Settlement with its administrative bank is deemed to be settlement with the Reserve Bank that sent the item.

When completing and filing a SAR, what is the bank NOT required to do?

Validation of debt says:

Safety and soundness concerns in FDIC Payday Lending Guidance clearly mention that there should be adequate capital as Minimum capital requirements are not enough to offset the risks of payday loans. Banks should hold capital against its subprime portfolio in amounts:

An error in EFT includes any of the following:

If a bank is a government securities broker or dealer, what are its responsibilities when it obtains a Form G-FIN-4 or an MSD-4 from an employee?

Which of the following is NOT a requirement of Regulation F?

First National Bank receives a notice from the IRS to begin withholding 28 percent of the interest payments on the money market savings account of Myra Wilcox because of payee underreporting. What is the most proper action for First National Bank to take?

Unless excluded by a board resolution or the bylaws, the following officers will be considered to be executive officers EXCEPT:

Payment to a beneficiary is made at the earlier of the time when:

Which of the following transactions requires completion of FinCEN Form 104, a CTR?

Under collateral requirements-12CFR 221.7, maximum loan value of margin stock is:

Your institution has identified a transaction by an existing depositor that should be blocked under OFAC requirements. The branch manager contacts you for specific instructions. Before reporting the transaction to OFAC, what should the bank do?

Certified Trust and Financial Advisor

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Exam 1: Certified Regulatory Compliance Manager

Content of notification to credit consumers must contain:

A banking agency is conducting a credit needs determination. Which of the following is NOT a criterion used in such a determination?

Which of the following loans or applications is EXCLUDED from HMDA reporting?

A ____________ must settle for an item with its administrative bank, whether or not it received the item from that bank. Settlement with its administrative bank is deemed to be settlement with the Reserve Bank that sent the item.

When completing and filing a SAR, what is the bank NOT required to do?

Validation of debt says:

Safety and soundness concerns in FDIC Payday Lending Guidance clearly mention that there should be adequate capital as Minimum capital requirements are not enough to offset the risks of payday loans. Banks should hold capital against its subprime portfolio in amounts:

An error in EFT includes any of the following:

If a bank is a government securities broker or dealer, what are its responsibilities when it obtains a Form G-FIN-4 or an MSD-4 from an employee?

Which of the following is NOT a requirement of Regulation F?

First National Bank receives a notice from the IRS to begin withholding 28 percent of the interest payments on the money market savings account of Myra Wilcox because of payee underreporting. What is the most proper action for First National Bank to take?

Unless excluded by a board resolution or the bylaws, the following officers will be considered to be executive officers EXCEPT:

Payment to a beneficiary is made at the earlier of the time when:

Which of the following transactions requires completion of FinCEN Form 104, a CTR?

Under collateral requirements-12CFR 221.7, maximum loan value of margin stock is:

Your institution has identified a transaction by an existing depositor that should be blocked under OFAC requirements. The branch manager contacts you for specific instructions. Before reporting the transaction to OFAC, what should the bank do?

Certified Trust and Financial Advisor

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