Question 1

______________ should include basic elements designed to understand and mitigate risk. It usually includes: Written program Compliance-related policies and procedures

Accepted Answer

A)  Tactical Compliance procedure 
B)  Rank solution 
C)  Compliance program 
D)  None of these

Question 2

During a EFT, if the institution determines that no error has occurred or that an error occurred in a manner or amount different than the alleged error, it:

Accepted Answer

A)  Must notify the consumer in writing of the date and amount of the debit to account and the fact that the institution will continue to honor checks and preauthorized transfers payable to third parties for seven business days 
B)  Must promptly provide on request copies of documentation on which institution relied on to determined that no error occurred 
C)  Must pay only items that the institution would have paid if the provisionally credited funds had not been debited 
D)  Any of these

Question 3

The following statements make assertions about the collection and reporting of data on race, ethnicity, sex, and income. Which statement is false?

Accepted Answer

A)  It must be requested on all HMDA-reportable applications received in person from natural persons. 
B)  It must be requested only for the loans where the application is taken in person. 
C)  It must be reported unless the loan was purchased. 
D)  It must be requested verbally on telephone applications.

Question 4

The act limited balloon payments in consumer leases and enabled consumers to compare lease terms with credit terms where appropriate. The act was implemented by Regulation M (Consumer Leasing). It requires disclosures to consumers before consummation of the lease agreement. This act is:

Accepted Answer

A)  Consumer leasing act 
B)  Risk disclosure act 
C)  ALLL 
D)  None of these

Question 5

Under Regulation M, what is a "consumer lease"?

Accepted Answer

A)  Any lease of $25,000 
B)  A consumer lease for $25,000 or less with an option to own the property after the lease expires 
C)  A consumer lease for $25,000 or less for the use of personal property 
D)  Any consumer or agricultural lease for $25,000 or less

Question 6

If a bank makes a loan that is in compliance with Regulation U, what will be the status of the loan at its consummation?

Accepted Answer

A)  The loan will be in compliance until it is renewed, regardless of the reduction of the borrower's equity in the stock. 
B)  The loan will be in compliance only if the value of the stock remains within the margin requirements. 
C)  The loan will be in compliance unless the status of the stock changes (for example, margin or nonmargin) 
D)  The loan will always be in compliance until its maturity, regardless of the reduction of the borrower's equity in the stock, provided there are no substitutions or withdrawals that adversely affect the loan value.

Question 7

Debt Cancellation Contracts and Debt Suspension Agreements coverage includes:

Accepted Answer

A)  National banks that issue debt cancellation contracts and debt suspension agreements with borrowers in connection with loans for personal, family, or household purposes 
B)  A national bank may not engage in any practice, including advertising, which would cause a reasonable person to be misled with respect to DSAs and DCCs 
C)  A bank must provide the long-form disclosures in writing before the customer completes the purchase of a contract. If the solicitation occurs in person, the long-form disclosures must be provided at that time 
D)  A bank must make the short-form disclosures orally at the time the bank first solicits the contract

Question 8

First National Bank is a wholly owned subsidiary of Bank Holding Company, Inc. Which of the following companies is NOT an affiliate of First National Bank?

Accepted Answer

A)  A company that owns 60 percent of Bank Holding Company, Inc. 
B)  A company of which First National owns 100 percent of the stock, set up solely to hold the title to the First National Bank building 
C)  A company established to sell securities and that is 100 percent owned by Bank Holding Company, Inc. 
D)  Another bank that is owned by Bank Holding Company, Inc.

Question 9

Payroll card accounts established directly or indirectly by an employer for the purpose of electronically transferring an employee's wages, salary, or other compensation on a recurring basis, are covered by:

Accepted Answer

A)  Regulation E 
B)  Regulation T 
C)  Regulation CC 
D)  Regulation Z

Question 10

A current member of the board of directors at First Savings Association (an institution with $150 million in total assets) was a director at First National Bank (an institution with total assets of $200 million) for many years. The two institutions are located in the same town. Before being elected to the board of First Savings, the director retired from the First National board. To honor his years of service with First National, the bank made him a director emeritus for life. He can attend any board meeting but cannot vote. He may speak to matters before the board and receives a director's fee. In actuality, however, the director never attends board meetings. Does this relationship violate Regulation L?

Accepted Answer

A)  No, because he does not attend meetings. 
B)  No, because he cannot vote. 
C)  Yes, because he receives a fee. 
D)  Yes, because he is really an honorary director.

Question 11

Which of the following interest-bearing accounts is EXEMPT from Form 1099 annual information reporting requirements under IRS regulations?

Accepted Answer

A)  Time certificates of deposit 
B)  Money market deposit accounts 
C)  Individual retirement accounts 
D)  Negotiable order of withdrawal accounts

Question 12

Martha Smith of First National Bank is attempting to close a large commercial loan to a manufacturing equipment company. In negotiating the interest rate on the loan Martha states that if the company will move some of its demand accounts to the bank, it could get a lower interest rate. Is this wrong?

Accepted Answer

A)  Yes. It violates the anti-tying provisions. 
B)  Yes. It is a restraint of trade. 
C)  No, unless moving the accounts is a condition of the loan. 
D)  No. The bank may condition the loan on the customer placing a deposit in the bank.

Question 13

What insurance disclosures are required in the lease disclosure statement?

Accepted Answer

A)  The types and amounts of coverage provided by the lessor and the cost to the lessee 
B)  The types, amounts, and estimated costs of recommended coverage even if not provided or paid by the lessor 
C)  The cost to the lessee NOTES 
D)  No insurance disclosures are required

Question 14

Debt collectors acquiring location information from a third party:

Accepted Answer

A)  Must identify themselves and, if expressly asked, must identify their employer 
B)  Must state that the call is to confirm or correct location information 
C)  Once location information is received, may not communicate with the third party again unless the person asks the debt collector to or the debt collector reasonably believes the earlier response was erroneous or incomplete and that person now has correct or complete location information 
D)  All of these

Question 15

It must provide in writing to consumer at least 21 days before the effective date of any change in a term or condition disclosed in the initial disclosure statement if the change results in: • Increased fees • Increased liability for the consumer • Fewer types of available EFTs • Stricter limitations on frequency or dollar amount of EFTs What is it?

Accepted Answer

A)  Change-in-terms notice 
B)  Error resolution notice 
C)  Unauthorized transfers 
D)  Return items document

Question 16

When is it possible for a bank to be exempted from compliance with some of the Government Securities Act custodial regulations?

Accepted Answer

A)  When the bank maintains its securities in the ordinary course of business 
B)  When the bank has procedures in place to make sure it complies with the custodial regulations of its federal regulatory agency 
C)  When the bank does not hold itself out as a government securities broker or dealer 
D)  When the bank uses more than the normal standard of care when maintaining possession and control of securities

Question 17

What are holders of unclaimed property required to do?

Accepted Answer

A)  Mail a notification to customers whose accounts may escheat to the state 
B)  Charge customers "inactive/unclaimed" fees for accounts that are dormant 
C)  Publish in a local paper the owners' names of accounts that will escheat 
D)  Discontinue paying interest on dormant accounts

Question 18

Which of the following actions subjects a lender to mortgage interest reporting requirements?

Accepted Answer

A)  The lender holds mortgage loans in the course of its trade or business. 
B)  The lender is a qualified FHA or VA lender. 
C)  The lender receives at least $500 in interest on a mortgage loan during a calendar year. 
D)  The lender offers unsecured home improvement loans.

Question 19

First National Bank would like to make a loan to an affiliate bank. Which of the following would NOT be acceptable as collateral for such a loan?

Accepted Answer

A)  U.S. Treasury bills in an amount equal to the loan 
B)  Stock traded on the New York Stock Exchange that has a market value equal to 130 percent of the loan amount 
C)  An account for the benefit of First National held at the affiliate bank in an amount equal to the loan amount 
D)  Eligible bankers' acceptances with a market value equal to the loan amount 582 AMERICAN BANKERS ASSOCIATION

Question 20

What is the maximum number of government securities transactions a bank may have and still remain exempt from the Government Securities Act?

Accepted Answer

A)  100 per year 
B)  250 per year 
C)  400 per year 
D)  499 per year

Exam 1: Certified Regulatory Compliance Manager