A.4 Financial services regulations and requirements Flashcards
Which of the following regulatory bodies oversees the securities industry in the United States?A) Federal Deposit Insurance Corporation (FDIC)B) Securities and Exchange Commission (SEC)C) Commodity Futures Trading Commission (CFTC)D) National Credit Union Administration (NCUA)
Securities and Exchange Commission (SEC)Explanation: The SEC is responsible for regulating the securities industry in the United States.
The Gramm-Leach-Bliley Act requires financial institutions to:A) provide consumers with privacy noticesB) disclose fees for servicesC) report suspicious activities to law enforcementD) maintain adequate capital levels
Provide consumers with privacy noticesExplanation: The Gramm-Leach-Bliley Act requires financial institutions to provide consumers with privacy notices describing how they collect, use, and share personal information.
Which of the following is not a requirement of the Bank Secrecy Act?A) Reporting cash transactions over $10,000B) Monitoring customer accounts for suspicious activityC) Conducting background checks on employeesD) Providing consumer privacy notices
Providing consumer privacy noticesExplanation: The Bank Secrecy Act requires financial institutions to report cash transactions over $10,000, monitor customer accounts for suspicious activity, and conduct background checks on employees.
Under the USA PATRIOT Act, financial institutions are required to:A) Report suspicious activity to law enforcementB) Maintain adequate capital levelsC) Provide consumers with privacy noticesD) Disclose fees for services
Report suspicious activity to law enforcement Explanation: The USA PATRIOT Act requires financial institutions to report suspicious activity to law enforcement to help prevent money laundering and terrorist financing.
Which of the following is not a requirement of the Fair Credit Reporting Act?A) Providing consumers with free credit reportsB) Disclosing information about credit decisions to consumersC) Reporting accurate information to credit bureausD) Providing consumers with privacy notices
Providing consumers with privacy notices Explanation: The Fair Credit Reporting Act requires financial institutions to provide consumers with free credit reports, disclose information about credit decisions to consumers, and report accurate information to credit bureaus.
Which of the following is not a requirement of the Securities Act of 1933?A) Registration of securities offeringsB) Disclosure of material information to investorsC) Prohibition of insider tradingD) Regulation of investment advisers
Regulation of investment advisers Explanation: The Securities Act of 1933 requires the registration of securities offerings, disclosure of material information to investors, and prohibition of insider trading.
Which of the following is not a requirement of the Investment Advisers Act of 1940?A) Registration of investment advisersB) Disclosure of conflicts of interestC) Prohibition of insider tradingD) Filing of annual reports
Prohibition of insider trading Explanation: The Investment Advisers Act of 1940 requires the registration of investment advisers, disclosure of conflicts of interest, and filing of annual reports.
The Dodd-Frank Wall Street Reform and Consumer Protection Act was enacted in response to:A) The 2008 financial crisisB) The savings and loan crisis of the 1980sC) The dot-com bubble of the late 1990sD) The Enron scandal
The 2008 financial crisis Explanation: The Dodd-Frank Wall Street Reform and Consumer Protection Act was enacted in response to the 2008 financial crisis.
Which of the following is not a requirement of the Bank Holding Company Act?A) Regulation of bank holding company acquisitionsB) Limitations on nonbanking activities of bank holding companiesC) Regulation of commercial bank lending practicesD) Regulation of capital adequacy of bank holding companies
Regulation of commercial bank lending practices. The Bank Holding Company Act regulates the activities of bank holding companies, including their acquisitions and nonbanking activities, as well as the capital adequacy of such companies. However, the Act does not regulate commercial bank lending practices.
An investment adviser receives a $10,000 bonus for recommending a particular investment to a client. Which of the following regulations has been violated?A) Bank Secrecy ActB) Investment Advisers Act of 1940C) Securities Act of 1933D) Fair Credit Reporting Act
Investment Advisers Act of 1940 Explanation: The investment adviser has violated the Investment Advisers Act of 1940 by failing to disclose the conflict of interest created by the bonus
A bank has provided a loan to a customer for a real estate project. The customer is behind on the loan payments and the bank is considering foreclosing on the property. Which of the following regulations requires the bank to provide the customer with notice and an opportunity to cure the default before foreclosing?A) Bank Secrecy ActB) Fair Credit Reporting ActC) Fair Debt Collection Practices ActD) Truth in Lending Act
Fair Debt Collection Practices ActExplanation: The Fair Debt Collection Practices Act requires the bank to provide the customer with notice and an opportunity to cure the default before foreclosing.
A brokerage firm has received a large deposit from a customer in cash. Which of the following regulations requires the brokerage firm to file a report with the Financial Crimes Enforcement Network (FinCEN)?A) Gramm-Leach-Bliley ActB) Securities Act of 1933C) Bank Secrecy ActD) Investment Advisers Act of 1940
Bank Secrecy ActExplanation: The Bank Secrecy Act requires financial institutions, including brokerage firms, to report cash transactions over $10,000 to FinCEN.
A credit card issuer has increased the interest rate on a customer’s account without providing notice or a reason for the increase. Which of the following regulations has been violated?A) Fair Credit Reporting ActB) Truth in Lending ActC) Fair Debt Collection Practices ActD) Investment Advisers Act of 1940
Truth in Lending ActExplanation: The Truth in Lending Act requires credit card issuers to provide notice and a reason for any interest rate increases.
A customer has filed a complaint with a financial institution regarding an error on their account. The financial institution has investigated the complaint and determined that no error occurred. Which of the following regulations requires the financial institution to provide the customer with a written explanation of the investigation results?A) Gramm-Leach-Bliley ActB) Truth in Savings ActC) Fair Credit Reporting ActD) Electronic Funds Transfer Act
Electronic Funds Transfer ActExplanation: The Electronic Funds Transfer Act requires financial institutions to provide customers with a written explanation of the investigation results when a complaint is filed regarding an error on an electronic funds transfer.
