Question 1

In which of the following circumstances is it LEAST appropriate for a bank to file a SAR regarding Internet activity?

Accepted Answer

A)  Bank determines that one of its customers is the victim of identity theft 
B)  Bank becomes aware of identity theft of its domain name (i.e., another entity selects a name similar to the bank's in order to confuse customers and obtain confidential financial information) 
C)  Bank discovers that someone has hacked into its data system in order to obtain confidential customer data 
D)  Bank determines through its transaction-monitoring program that a customer is making electronic transfers between his own checking and savings accounts that are just below the $10,000 reporting level 
A)  Bank determines that one of its customers is the victim of identity theft 
B)  Bank becomes aware of identity theft of its domain name (i.e., another entity selects a name similar to the bank's in order to confuse customers and obtain confidential financial information) 
C)  Bank discovers that someone has hacked into its data system in order to obtain confidential customer data 
D)  Bank determines through its transaction-monitoring program that a customer is making electronic transfers between his own checking and savings accounts that are just below the $10,000 reporting level

Question 2

Any of the following foreign correspondents for which the Federal Reserve maintains an account EXCEPT:

Accepted Answer

A)  A foreign bank 
B)  A foreign banker's Lessee 
C)  A foreign state 
D)  A foreign correspondent or agency 
A)  A foreign bank 
B)  A foreign banker's Lessee 
C)  A foreign state 
D)  A foreign correspondent or agency

Question 3

A consumer reporting agency may furnish a consumer report

Accepted Answer

A)  If not authorized in writing by the consumer 
B)  In response to a court order having jurisdiction or a subpoena issued by a federal grand jury or review or collection of an account of the consumer 
C)  In connection with a credit or insurance transaction 
D)  For employment purposes Before procuring a consumer report, an employer Must disclose to the individual in writing that a consumer report may be obtained Must obtain written authorization from the individual before procuring the report 
A)  If not authorized in writing by the consumer 
B)  In response to a court order having jurisdiction or a subpoena issued by a federal grand jury or review or collection of an account of the consumer 
C)  In connection with a credit or insurance transaction 
D)  For employment purposes Before procuring a consumer report, an employer Must disclose to the individual in writing that a consumer report may be obtained Must obtain written authorization from the individual before procuring the report

Question 4

Which of the following is/are NOT limitations on liability in EFT?

Accepted Answer

A)  $150 liability limit if consumer notifies the institution within two business days of discovery of loss or theft of access device, not including the day the consumer learns of the loss or theft 
B)  If state law has more generous limitations of liability for the consumer, the state laws will govern 
C)  Full liability (up to the amount of the unauthorized transfer) may be imposed if the consumer does not notify the institution within 30 days of the institution's transmission of the statement on which the first unauthorized transfer appears (to raise the liability limit, the institution must first establish that the unauthorized transfers would not have occurred if the consumer had notified the institution within the 30 days). The unlimited liability applies only to the transactions that occur after the 30-day time period 
D)  Extenuating circumstances (such as hospital confinements, travel, and so forth) may extend the liability time periods 
A)  $150 liability limit if consumer notifies the institution within two business days of discovery of loss or theft of access device, not including the day the consumer learns of the loss or theft 
B)  If state law has more generous limitations of liability for the consumer, the state laws will govern 
C)  Full liability (up to the amount of the unauthorized transfer) may be imposed if the consumer does not notify the institution within 30 days of the institution's transmission of the statement on which the first unauthorized transfer appears (to raise the liability limit, the institution must first establish that the unauthorized transfers would not have occurred if the consumer had notified the institution within the 30 days). The unlimited liability applies only to the transactions that occur after the 30-day time period 
D)  Extenuating circumstances (such as hospital confinements, travel, and so forth) may extend the liability time periods

Question 5

Trust Co. and First National Bank are located in the same city and each has assets of over $20 million. The president of First National has been asked to serve as a director of Trust Co. First National has no trust department and no trust operations. Trust Co. operates solely as a trust company. Would this relationship violate the prohibitions against management official interlocks in Regulation L?

Accepted Answer

A)  Yes, because the institutions are in the same city. 
B)  No, because the institutions are not both depository institutions. 
C)  No, because the institutions do not compete. 
D)  Maybe, but it depends on the size of the institutions. 
A)  Yes, because the institutions are in the same city. 
B)  No, because the institutions are not both depository institutions. 
C)  No, because the institutions do not compete. 
D)  Maybe, but it depends on the size of the institutions.

Question 6

For which of the following is a bank most likely to be in danger of receiving a cease and desist order?

Accepted Answer

A)  Repetition in a BSA examination of a noncritical deficiency reported in a previous BSA examination 
B)  Failure to document AML training to its part-time clerical employees 
C)  A 2 percent error rate on the bank's CTRs 
D)  Failure to file suspicious activity reports 
A)  Repetition in a BSA examination of a noncritical deficiency reported in a previous BSA examination 
B)  Failure to document AML training to its part-time clerical employees 
C)  A 2 percent error rate on the bank's CTRs 
D)  Failure to file suspicious activity reports

Question 7

Which of the following is the best method for a large bank to use in monitoring its CRA performance?

Accepted Answer

A)  Review the effectiveness of marketing materials. 
B)  Evaluate approval and denial rates for minority loan applicants. 
C)  Perform a quarterly evaluation of the bank's loans-to-deposits ratio. 
D)  Perform a geographic analysis of lending levels and dispersion of loans. 
A)  Review the effectiveness of marketing materials. 
B)  Evaluate approval and denial rates for minority loan applicants. 
C)  Perform a quarterly evaluation of the bank's loans-to-deposits ratio. 
D)  Perform a geographic analysis of lending levels and dispersion of loans.

Question 8

Martin Taylor, a loan officer at First National Bank, is a long-time friend of Bill Evans, a local homebuilder. Bill would like a line of credit at the bank and discusses the potential loan with Martin. During the discussion, Martin expresses his desire to build a house one day and Bill offers to build him one "at cost plus 5 percent." If Martin accepts Bill's offer, can he continue to act as his loan officer?

Accepted Answer

A)  No. The value of the gift is too great. 
B)  Yes, if Martin discloses this fact to the bank. 
C)  Yes, if Martin does not let the discount on the house affect his decision making process. 
D)  Yes, if the bank's code of conduct allows such activity. 
A)  No. The value of the gift is too great. 
B)  Yes, if Martin discloses this fact to the bank. 
C)  Yes, if Martin does not let the discount on the house affect his decision making process. 
D)  Yes, if the bank's code of conduct allows such activity.

Question 9

Which of the following is NOT included in the definition of margin stock?

Accepted Answer

A)  Stock traded on a national securities exchange 
B)  Nonmargin stock convertible to margin stock 
C)  Debt securities convertible to margin stock 
D)  Warrants to purchase margin stock 
A)  Stock traded on a national securities exchange 
B)  Nonmargin stock convertible to margin stock 
C)  Debt securities convertible to margin stock 
D)  Warrants to purchase margin stock

Question 10

What is actually a Single credit rule-12 CFR 221.3(d)?

Accepted Answer

A)  All purpose credit extended to a customer will be considered to be a single credit for purposes of Regulation U 
B)  The value of all collateral securing all-purpose loans will be aggregated to determine if it is sufficient 
C)  If unsecured purpose credit is extended before secured purpose credit, the loans need only be combined for purposes of applying the withdrawal and substitution rules 
D)  All of the above 
A)  All purpose credit extended to a customer will be considered to be a single credit for purposes of Regulation U 
B)  The value of all collateral securing all-purpose loans will be aggregated to determine if it is sufficient 
C)  If unsecured purpose credit is extended before secured purpose credit, the loans need only be combined for purposes of applying the withdrawal and substitution rules 
D)  All of the above

Question 11

For which of the following must a bank obtain Form FR U-1 when a loan is in excess of $100,000?

Accepted Answer

A)  A loan made to purchase margin stock 
B)  A loan secured by margin stock 
C)  A loan made to purchase margin stock and secured by margin stock 
D)  A loan secured by stock (either margin or nonmargin) 
A)  A loan made to purchase margin stock 
B)  A loan secured by margin stock 
C)  A loan made to purchase margin stock and secured by margin stock 
D)  A loan secured by stock (either margin or nonmargin)

Question 12

Examples of unfair practices mentioned in guidelines against Predatory and Abusive Lending includes loan flipping and loan equity stripping. It is said that:

Accepted Answer

A)  Loan flipping may be unfair because it increases the chances of foreclosure by decreasing home equity and increasing debt burden 
B)  Equity stripping is the practice of making loans secured by the consumer's home but with high, up-front fees that are financed and secured by the home 
C)  Loan flipping is the practice of making loans secured by the consumer's home but with high, up-front fees that are financed and secured by the home 
D)  Equity stripping may be unfair because it increases the chances of foreclosure by decreasing home equity and increasing debt burden 
A)  Loan flipping may be unfair because it increases the chances of foreclosure by decreasing home equity and increasing debt burden 
B)  Equity stripping is the practice of making loans secured by the consumer's home but with high, up-front fees that are financed and secured by the home 
C)  Loan flipping is the practice of making loans secured by the consumer's home but with high, up-front fees that are financed and secured by the home 
D)  Equity stripping may be unfair because it increases the chances of foreclosure by decreasing home equity and increasing debt burden

Question 13

Which of the following loans would First National report on its loan application register?

Accepted Answer

A)  A refinancing of the balance of a home purchase loan made five years earlier, both loans will be secured by dwellings 
B)  A loan made to a couple, secured by their home, to pay for their children's education 
C)  A bridge loan made to a newly transferred executive of a local company 
D)  A loan made to construct a principal dwelling 
A)  A refinancing of the balance of a home purchase loan made five years earlier, both loans will be secured by dwellings 
B)  A loan made to a couple, secured by their home, to pay for their children's education 
C)  A bridge loan made to a newly transferred executive of a local company 
D)  A loan made to construct a principal dwelling

Question 14

A member bank wants to sell assets to an affiliated bank that is 100 percent owned by the same bank holding company. Is this transaction allowed?

Accepted Answer

A)  No. It is prohibited. 
B)  Yes, but it is subject to an aggregate limit of 10 percent of the member bank's capital and unimpaired surplus. 
C)  Yes. It is permitted, if the assets are not low quality. 
D)  Yes, but it must be classified on the receiving bank's books as low quality assets. 
A)  No. It is prohibited. 
B)  Yes, but it is subject to an aggregate limit of 10 percent of the member bank's capital and unimpaired surplus. 
C)  Yes. It is permitted, if the assets are not low quality. 
D)  Yes, but it must be classified on the receiving bank's books as low quality assets.

Question 15

Which of the following is (are) NOT covered by the regulation?

Accepted Answer

A)  All banks regardless of insurance sales. 
B)  A lender who indicates to the consumer that he or she is selling insurance on behalf of the bank 
C)  A person to whom the bank refers consumers and who has a contract with the bank to receive commissions on sales of insurance 
D)  A person who sells insurance to nonconsumers for other than personal, family, or household purposes 
A)  All banks regardless of insurance sales. 
B)  A lender who indicates to the consumer that he or she is selling insurance on behalf of the bank 
C)  A person to whom the bank refers consumers and who has a contract with the bank to receive commissions on sales of insurance 
D)  A person who sells insurance to nonconsumers for other than personal, family, or household purposes

Question 16

Bob Richardson has had three loan applicants this morning: • Heather Smith, age 17, who needs a car loan for $9,500 for 3 years • John Bako, age 42, who would like a stock loan for $15,000 for 1 year • Maynard Williams, age 70, recently retired, who needs a $50,000 home improvement loan for 12 years Bob's bank uses a judgmental credit evaluation system. For which of these applications is Bob able to consider the age of the applicant as a factor in the decision making process?

Accepted Answer

A)  All of them 
B)  None of them 
C)  Only Mr. Williams 
D)  Mr. Williams and Ms. Smith 
A)  All of them 
B)  None of them 
C)  Only Mr. Williams 
D)  Mr. Williams and Ms. Smith

Question 17

What should a bank's Bank Secrecy Act compliance program include?

Accepted Answer

A)  All lobby notice requirements 
B)  The one-year record retention requirements 
C)  Designation of individuals responsible for day-to-day compliance 
D)  A list of types of loans covered by the Act 
A)  All lobby notice requirements 
B)  The one-year record retention requirements 
C)  Designation of individuals responsible for day-to-day compliance 
D)  A list of types of loans covered by the Act

Question 18

Compliance issues related to payday lending are all of the following EXCEPT:

Accepted Answer

A)  Payday lending may adversely affect a bank's CRA rating. Any illegal or questionable practices will negatively affect a bank's CRA performance. A payday lending program may be inconsistent with helping to meet the community's credit needs 
B)  The bank (or its third-party partner) must properly disclose all finance charges and fees to payday lending customers. Advertisements of the program are also subject to Truth-in-Lending requirements 
C)  Adverse action disclosures must be provided to applicants of payday loans that are denied if a consumer report (including check tracking services) was used in the credit decision 
D)  The bank may be subject to the FOC's unfair or deceptive practices rules. 
A)  Payday lending may adversely affect a bank's CRA rating. Any illegal or questionable practices will negatively affect a bank's CRA performance. A payday lending program may be inconsistent with helping to meet the community's credit needs 
B)  The bank (or its third-party partner) must properly disclose all finance charges and fees to payday lending customers. Advertisements of the program are also subject to Truth-in-Lending requirements 
C)  Adverse action disclosures must be provided to applicants of payday loans that are denied if a consumer report (including check tracking services) was used in the credit decision 
D)  The bank may be subject to the FOC's unfair or deceptive practices rules.

Question 19

Record keeping requirements-12 CFR 215.8 elaborates that:

Accepted Answer

A)  Each bank must establish a recordkeeping system to keep records necessary for compliance with Regulation O 
B)  Banks may use any alternative recordkeeping method for insiders of affiliates if the bank's regulatory agency determines the bank's method is at least as effective as that required by Regulation O 
C)  All recordkeeping systems must Include either an annual survey of insiders to identify related interests, or a requirement as part of each extension of credit that the borrower indicates whether he or she is an insider. Provide for the maintenance of records of all credit to insiders, including the amounts and terms 
D)  All of these 
A)  Each bank must establish a recordkeeping system to keep records necessary for compliance with Regulation O 
B)  Banks may use any alternative recordkeeping method for insiders of affiliates if the bank's regulatory agency determines the bank's method is at least as effective as that required by Regulation O 
C)  All recordkeeping systems must Include either an annual survey of insiders to identify related interests, or a requirement as part of each extension of credit that the borrower indicates whether he or she is an insider. Provide for the maintenance of records of all credit to insiders, including the amounts and terms 
D)  All of these

Question 20

A bank has given a customer a merchandise gift with a fair market value of $25.00 for opening a deposit account. Which of the following statements describes the proper reporting status of this gift?

Accepted Answer

A)  If the cost of the gift is under $20.00, it is not reportable to the IRS. 
B)  The cost of the gift is credited to the customer's account as a bonus, increasing the account balance. 
C)  The fair market value of the gift is reported to the customer on the periodic statement. 
D)  The fair market value of the gift is added to the interest paid and reported on Form 1099-INT. 
A)  If the cost of the gift is under $20.00, it is not reportable to the IRS. 
B)  The cost of the gift is credited to the customer's account as a bonus, increasing the account balance. 
C)  The fair market value of the gift is reported to the customer on the periodic statement. 
D)  The fair market value of the gift is added to the interest paid and reported on Form 1099-INT.

In which of the following circumstances is it LEAST appropriate for a bank to file a SAR regarding Internet activity?

Any of the following foreign correspondents for which the Federal Reserve maintains an account EXCEPT:

A consumer reporting agency may furnish a consumer report

Which of the following is/are NOT limitations on liability in EFT?

For which of the following is a bank most likely to be in danger of receiving a cease and desist order?

Which of the following is the best method for a large bank to use in monitoring its CRA performance?

Which of the following is NOT included in the definition of margin stock?

What is actually a Single credit rule-12 CFR 221.3(d)?

For which of the following must a bank obtain Form FR U-1 when a loan is in excess of $100,000?

Examples of unfair practices mentioned in guidelines against Predatory and Abusive Lending includes loan flipping and loan equity stripping. It is said that:

Which of the following loans would First National report on its loan application register?

A member bank wants to sell assets to an affiliated bank that is 100 percent owned by the same bank holding company. Is this transaction allowed?

Which of the following is (are) NOT covered by the regulation?

What should a bank's Bank Secrecy Act compliance program include?

Compliance issues related to payday lending are all of the following EXCEPT:

Record keeping requirements-12 CFR 215.8 elaborates that:

A bank has given a customer a merchandise gift with a fair market value of $25.00 for opening a deposit account. Which of the following statements describes the proper reporting status of this gift?

Certified Trust and Financial Advisor

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Exam 1: Certified Regulatory Compliance Manager

In which of the following circumstances is it LEAST appropriate for a bank to file a SAR regarding Internet activity?

Any of the following foreign correspondents for which the Federal Reserve maintains an account EXCEPT:

A consumer reporting agency may furnish a consumer report

Which of the following is/are NOT limitations on liability in EFT?

For which of the following is a bank most likely to be in danger of receiving a cease and desist order?

Which of the following is the best method for a large bank to use in monitoring its CRA performance?

Which of the following is NOT included in the definition of margin stock?

What is actually a Single credit rule-12 CFR 221.3(d)?

For which of the following must a bank obtain Form FR U-1 when a loan is in excess of $100,000?

Examples of unfair practices mentioned in guidelines against Predatory and Abusive Lending includes loan flipping and loan equity stripping. It is said that:

Which of the following loans would First National report on its loan application register?

A member bank wants to sell assets to an affiliated bank that is 100 percent owned by the same bank holding company. Is this transaction allowed?

Which of the following is (are) NOT covered by the regulation?

What should a bank's Bank Secrecy Act compliance program include?

Compliance issues related to payday lending are all of the following EXCEPT:

Record keeping requirements-12 CFR 215.8 elaborates that:

A bank has given a customer a merchandise gift with a fair market value of $25.00 for opening a deposit account. Which of the following statements describes the proper reporting status of this gift?

Certified Trust and Financial Advisor

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