MCQ Chapter 2

Question 1

Why is KYC important?

a. In order to adhere to Basel Committee on Banking Supervision safeguarding polices (2001), the Money Laundering Regulations Act 2010, MiFID II regulations and FSMA.

b. In order to adhere to Basel Committee on Banking Supervision safeguarding polices (2001), and the Money Laundering Regulations Act 2010.

c. In order to adhere to Basel Committee on Banking Supervision safeguarding polices, the Money Laundering Regulations Act 2010, and MiFID II regulations.

d. In order to adhere to EMIR safeguarding polices, the Money Laundering Regulations Act 2010, and MiFID II regulations.

Answer 1

In order to adhere to Basel Committee on Banking Supervision safeguarding polices, the Money Laundering Regulations Act 2010, and MiFID II regulations.

Question 2

What is a nostro account

Answer 2

A nostro account refers to a bank account held in a foreign country by a domestic bank, denominated in the currency of the overseas country

Question 3

What is AMA?

Answer 3

Advanced Measurement Approach.

Question 4

What are the three requirements for a firm to use AMA?

Answer 4

VAR estimate to a 99% Confidence level
Losses must be calculated on a 10 day period
Historic data must cover a minimum period of 250 days

Question 5

What are the 8 introduces of Dodd-Frank legislation (EMIRATE)

Answer 5

• Ends to big to fail
• Making risks transparent
• Investor protection
• Regulatory enforcement
• Advance warning systems
• Technical expertise
• Executive compensation & Corporate governance

Question 6

Pillar 1 of Basel

Answer 6

Capital & Liquidity adequacy

Question 7

Pillar 2 of Basel

Answer 7

Supervisory Process

Question 8

Pillar 3 of Basel

Answer 8

Market Disepline & Publication

Question 9

What is the percentage of tax imposed on a recalcitrant account under the provisions of the Foreign Account Tax Compliance Act (FATCA)?
Question 16Select one:

a. 10% FATCA withholding tax.

b. 20% FATCA withholding tax.

c. 30% FATCA withholding tax.

d. 40% FATCA withholding tax.

Answer 9

30% FATCA withholding tax.

Question 10

What is FATCA

Answer 10

Foreign Account Tax Compliance Act . Stops dodgy ofshore accounts

Question 11

What is level 1 legislation

Answer 11

EU wide legislation

Question 12

What is level 2 legislation

Answer 12

EU wide legislation, nitty gritty bits sorted domestically

Question 13

What is EMIR

Answer 13

European Market Infrastructure Regulation. Prudential standards for CCP’s

Question 14

Which regulation requires organisations’ technology systems to ensure that derivative contracts are captured and reported, the necessary clearing obligations are followed and that there is sufficient data and controls to support new risk management standards needed to support the counterparty credit risk and operational risk needs?

Answer 14

European Market Infrastructure Regulation (EMIR)

Central Securities Depositories Regulation (CSDR)

Europe-Wide Regulation

General Data Protection Regulation (GDPR)

Question 15

Basel II uses a ‘three pillar’ approach to promote…

Answer 15

Greater stability in the financial system
.
increased individual accountability

the reshaping of the financial markets, and the relationship between banks and their customers

responsible management of customer assets

Question 16

Which of the following statements is true?

Select one:

a.
OTFs were introduced as a result of MiFIDII which are not a regulated market, but still permit the selling and buying of financial securities with the exception of equities.

b.
MTFs were introduced as a result of MiFIDII which are not a regulated market, but still permit the selling and buying of all financial securities.

c.
OTFs were introduced as a result of MiFIDII which are a regulated market, but still permit the selling and buying of financial securities with the exception of equities.

d.
OTFs were introduced as a result of MiFIDII which are not a regulated market, but still permit the selling and buying of all financial securities.