Chapter 15 - Compliance Considerations Flashcards

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1
Q

Broker-dealers must verify the identity of each customer within a reasonable period of time from the account opening due to:

A

terrorism and/or money laundering

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2
Q

The three stages of money laundering are:

A

Placement, layering, and integration

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3
Q

Broker-dealers must verify the identity of a customer:

A

within a reasonable period of time to opening an account.

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4
Q

Establishes rules to protect the privacy of clients’ confidential information.

A

Regulation SP

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5
Q

A privacy notice must be provided to clients when _____ and _____.

A

opening the account; annually thereafter

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6
Q

Requires financial institutions to create policies to detect identity theft.

A

FTC Red Flag Rules

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7
Q

Communication that’s distributed to 25 or fewer retail investors within a 30-calendar-day period.

A

Correspondence

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8
Q

Customer proceeds that have not been withdrawn or reinvested.

A

Free credit balance

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9
Q

Written or electronic communication that is distributed or made available only to institutional investors.

A

Institutional communication

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10
Q

A customer that has made an unsolicited inquiry or effected a transaction with the firm is known as a(n):

A

establish customer

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11
Q

If a firm acts in an agency capacity, the _____ must be disclosed on a confirmation.

A

commission

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12
Q

What form must be filed by a broker-dealer employee who believes that a check has been tampered with or forged?

A

A Suspicious Activity Report

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13
Q

When a customer deposits or transfers assets below the reporting thresholds in an attempt to avoid detection.

A

Structuring

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14
Q

The process for communicating with regulators and mission-critical systems required to continue business are in:

A

the broker-dealers continuity plan

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15
Q

Under Regulation SP, a _____ is someone who gives nonpublic, personal information to a broker-dealer that may result in trades

A

consumer

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16
Q

To prepare for significant business disruptions a broker-dealer has a:

A

business continuity plan

17
Q

Under Regulation SP, a _____ is someone who has an ongoing relationship with a firm.

A

customer

18
Q

When is a firm’s business continuity plan made available to FINRA?

A

Promptly upon request

19
Q

Broker-dealers are required to send balance sheets to customers every:

A

six months

20
Q

Jerry is planning to open an account at Grace Securities. Grace must furnish him with a privacy notice:

A

At the time he opens the account