MODULE 4

Question 1

challenges and complexities financial
institutions face

Answer 1

• legal frameworks
• international standards
• industry regulations

Question 2

issues arise from

Answer 2

• the need to balance financial stability* transparency
• protection against fraud
• manage the risks inherent in global transactionsand modern financial systems

Question 3

designed to maintain the stability, integrity, andsecurity of financial systems

Answer 3

REGULATORY FRAMEWORKS

Question 4

ensure that financial institutions operatewithinclear legal boundaries while mitigatingriskssuchas fraud, money laundering, and financial crises

Answer 4

REGULATORY FRAMEWORKS

Question 5

provide oversight of electronic bankingoperations to address the unique challengesofdigital transactions, cybersecurity, andcross-border transactions

Answer 5

REGULATORY FRAMEWORKS

Question 6

Global Regulatory Frameworks for Finan
*help maintain the soundness of theinternational financial system

Answer 6

*set standards for capital adequacy
*risk management
*market behavior

Question 7

are a set of international banking regulations developed by the Basel Committee on Banking Supervision (BCBS) that establish standards for capital adequacy, risk management, and bank supervision.

Answer 7

Basel Accords

Question 8

Introduced in 1988, it focused on credit risk and mandated banks to hold capital equivalent to 8% of their risk-weighted assets to

Answer 8

Basel I

Question 9

Enhanced Basel I by adding guidelines on operational risk andmarketrisk,focusing on improved risk management

Answer 9

Basel II

Question 10

Developed after the 2008 financial crisis, ____ introduced more stringent capital requirements, leverage ratios, and liquidity requirements. It aims to ensure that banks have enough capital to withstand financial stress and avoid systemic crises.

Answer 10

Basel III

Question 11

are designed to prevent the misuse of financial systemsforillicitactivities such as money laundering and terrorist financing.

Answer 11

Anti-Money Laundering (AML) Regulations

Question 12

was enacted in response to the 2008 financial crisis. It introduced comprehensive reforms to reduce risks in the financial system, including stricter capital requirements, oversight of systemically important financial institutions (SIFIs), and enhanced consumer protections.

Answer 12

Dodd-Frank Wall Street Reform and Consumer Protection Act

Question 13

Prohibits banks from engaging in proprietarytradingandlimits their investment in hedge funds andprivateequityfunds to reduce risky behavior that couldleadtofinancialinstability

Answer 13

Volcker Rule

Question 14

is a European regulatory frameworkdesignedtoincrease transparency and protect investors inthefinancialmarkets. It governs financial institutionsthatprovideinvestment services, covering areas suchas tradereporting,transaction transparency, and investor protection

Answer 14

MiFID II (Markets in Financial Instruments Directive,EU)

Question 15

is an EU regulation that aims to improve competition, innovation, and security in the electronic payments market. It requires stronger customer authentication and allows third-party providers to access bank account information with customer consent, enhancing innovation in the fintech sector.

Answer 15

PSD2 (Payment Services Directive 2, EU)

Question 16

Ensures that online payments and access to financial accountsaresecure by requiring multi-factor authentication

Answer 16

Strong Customer Authentication (SCA)

Question 17

Allows third-party financial service providers toaccessconsumers’banking information, increasing competition andinnovation.

Answer 17

Open Banking

Question 18

in the United States mandates that financial institutions, including those offering electronic banking services, must keep records and file reports on cash transactions and suspicious activities that may be linked to money laundering or other financial crimes.

Question 19

must monitor digital transactionsandcomplywith AML regulations

Answer 19

E-banking platforms

Question 20

faced one of the largest regulatory fines inrecenthistorywhen it was found that employees had created millionsoffraudulentaccounts without customer consent. The scandal highlightedaseverelack of internal controls and a toxic sales culture drivenbyaggressivecross-selling tactics. The bank was fined $3 billion, andthecaseledtoreforms in sales practices across the banking industry