Questions 6-10 Flashcards
ACME national bank plans to acquire Smith Brothers insurance agency and make it an operating subsidiary of the bank. ACME is considered a well-managed and adequately capitalized bank. What regulatory-related action must ACME take to obtain the agency?
A. Complete the sale of the agency and notify the OCC within 10 days
B. Complete the sale of the agency and notify the OCC within 30 days
C. No regulatory notice is required
D. Notify the OCC before completing the sale
D
What obligation does a bank have to disclose a covered CRA agreement 40 months after it terminates?
A. It must maintain a copy in its CRA public file.
B. It must send a copy to its regulatory agency upon request.
C. It must send a copy to a member of the public upon request.
D. It has no obligation to disclose these covered CRA agreements.
D
Which of the following parties is responsible for risk management of RDC activities offered by a financial institution?
A. A Third Party Service Provider
B. The individual RDC customer
C. The Legal Department of the Bank
D. The Board of Directors of the Bank
D
Which of the following does NOT require a Truth-in-Savings Act disclosure?
A. An individual holding the account for personal, family, or household purposes
B. Holders of IRA and SEP accounts when invested in covered accounts
C. Holders of accounts under the Uniform Transfer to Minors Act
D. Accounts established for unincorporated, nonbusiness associations
D
When is it permissible for a bank that is a government securities broker or dealer to refrain from filing a Form G-FIN-5 or a Form MSD-5 when an employee terminates the associated person status?
A. When the employee files the form
B. When the bank does not have all the necessary information and notifies its regulatory agency
C. When the employee’s status is reinstated within six months
D. When the employee remains employed by the bank and the bank notifies its regulatory agency
D
First National Bancshares, Inc., a bank holding company, filed an application with its Federal Reserve Bank on March 1 to acquire a subsidiary bank. On March 15 the Federal Reserve Board asked First National for more information. On April 1 the Federal Reserve Bank received the completed application and accepted it. On April 5 the Federal Reserve Bank notified First National of the April 1 acceptance and referred the application to the Federal Reserve Board. Under the normal rules, by what date must the Federal Reserve Board act on the application?
A. June 1
B. April 30
C. June 5
D. July 1
A
Which of the following items is considered a low-quality asset?
A. An asset in a nonaccrual status
B. An asset on which interest is past due 15 days
C. An asset that will be transferred to the workout area within the next 60 days so that the terms can be renegotiated
D. None of the above
A
ACME Bank has a joint marketing agreement with Friendly Brokerage Company whereby ACME and Friendly agree to jointly market certain financial products. ACME would like to refer customers to Friendly by providing the Friendly brokerage officer with names of ACME customers who might be interested in the financial products Friendly offers. Friendly has signed an agreement with ACME promising not to disclose any information about ACMEs customers to others. What type of responsibility does ACME have to its customers under the Privacy Regulation?
A. ACME must give a disclosure and opt-out opportunity to all customers.
B. ACME has no disclosure or opt-out responsibilities.
C. ACME must give customers a notice that it provides information to companies with which it has joint marketing agreements.
D. ACME must give an opt-out option but no disclosure.
C
Which of the following types of transactions should NOT be counted when monitoring the Regulation D transaction limits on money market deposit accounts?
A. ATM transactions
B. ACH utility payments
C. Debit card purchases
D. Internet bill paying transfers
A
Which of the following criteria accurately describes a small business loan for which a large bank must annually collect and report data?
A. A loan to a business that employs fewer than 50 people
B. A line of credit to a business with assets of less than $5 million
C. A loan with an original principal amount of $1 million or less to a business
D. A loan to a business that does not generally have access to regional or national credit markets
D
Which of the following is NOT a corporate practice required of bank holding companies?
A. Each bank subsidiary must file a notice with the Federal Reserve before offering a new product.
B. Each bank subsidiary must conduct its operations in a safe and sound manner.
C. Each bank subsidiary must be insured by the FDIC.
D. Each bank subsidiary must file a notice with the Federal Reserve before purchasing any of its own securities.
A
By what date must the bank send the borrower a statement in connection with an information return on foreclosed or abandoned property?
A. January 15 of the year following the year of the foreclosure or abandonment
B. January 31 of the year following the year of the foreclosure or abandonment
C. February 28 of the year following the year of the foreclosure or abandonment
D. March 1 of the year following the year of the foreclosure or abandonment
B
A bank provides several value-added services to checking account customers, such as free travel insurance provided by a nonaffiliated insurance company. Each month the bank provides a list of customer names and addresses to the insurance company. What should be the compliance officers GREATEST concern?
A. That marketing materials clearly and conspicuously describe the travel insurance
B. That consumers are aware of this valuable service so the bank retains their relationship
C. That customer service representatives fully describe the features of the checking accounts
D. That the bank has a written agreement with the insurance company and the bank’s privacy notice accurately describes the relationship
D
ACME Bank is a $600 million institution with 15 branches within three counties. Because of its proximity to Mexico, the bank has many foreign national customers and makes many foreign wire transfers for its customers. Currently the banks branch managers print the OFAC list of SDNs and place them in strategic places in each branch. The wire transfer department keeps its own copy of the list. The compliance officer has implemented an annual auditing program to check the banks compliance with OFAC regulations. The findings of this audit are provided to the banks board of directors annually. The banks regulatory agency has indicated to management that the bank has a high risk for BSA/AML/OFAC compliance. Of the following actions, which would be the most effective to strengthen the banks OFAC compliance?
A. Conduct compliance audits twice a year
B. Purchase and implement interdiction software for the wire transfer area
C. As an internal control procedure, require the BSA officer to check the OFAC Web site daily for any changes to the SDN list
D. Routinely provide account transaction information to federal security agencies so suspicious patterns can be detected
B
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?
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.
D
The following accounts are at State National Bank:
John Doe
John Doe and Joe Smith
Mary Smith and Joe Smith
Fred Richards and Mary Smith
What is the minimum number of initial privacy notices the bank must give?
A. Three
B. Four
C. Six
D. Seven
B
Trust Co. and First National Bank are located in the same city and each has assets of over $50 million. The president of First National has been asked to serve as a director of Trust Co. First National has no trust department and no trust operations. Trust Co. operates solely as a trust company. Would this relationship violate the prohibitions against management official interlocks in Regulation L?
A. Yes, because the institutions are in the same city.
B. No, because the institutions are not both depository institutions.
C. No, because the institutions do not compete.
D. Maybe, but it depends on the size of the institutions.
A
Martha Whitmire, the BSA Compliance Officer for First National Bank, is responsible for monitoring the bankﾒs daily currency activity and wire transfers, for compliance with information retention and reporting requirements. Ms. Whitmire notices during her review on March 10 that, during the previous two weeks, a transaction occurred on the same account several times during the week. The activity appeared at one branch office as cash deposits in dollar amounts under the reporting thresholds. Ms. Whitmire discusses this activity with the branch manager and determines that this same deposit activity occurred several times during the previous six weeks. She then conducts a more extensive examination of the accountﾒs activity for several months and discovers that cash deposits were made at one branch office and purchases of bank cashierﾒs checks were made by withdrawals from the same account at a different branch office. All withdrawals and purchases of cashierﾒs checks were for the identical amount as the cash deposits. Which statement best describes Ms. Whitmireﾒs responsibility? A. Complete a CTR for each of the cash activities at the branch office B. Make no report of the activities because the transactions were not discovered until after the 15-day reporting deadline C. Report the account activity to senior management for further review D. Report the account activity as suspicious account activity and recommend that a SAR be filed
D
In order to improve the efficiency and effectiveness of its Right to Financial Privacy Act compliance program, what should a bank do FIRST?
A. Centralize the receipt and handling of all government agency requests for customer records with a designated officer
B. Include in the bank’s loan application an authorization for customers to sign, giving the bank permission to disclose financial records to government agencies as needed
C. Simplify the bank’s handling process by adopting a policy that the bank will accept only judicial subpoenas for customer financial records
D. Create an ongoing training program on the Right to Financial Privacy Act for all bank officers and employees
A
To which of the following activities does the FFIEC Guidance on Authentication apply?
A. Internet banking only
B. Telephone and Internet banking
C. Call center banking only
D. Internet, telephone, and call center banking
D
A member bank wants to sell assets to an affiliated bank that is 100 percent owned by the same bank holding company. Is this transaction allowed?
A. No. It is prohibited.
B. Yes, but it is subject to an aggregate limit of 10 percent of the member bank’s capital and unimpaired surplus.
C. Yes. It is permitted, if the assets are not low quality.
D. Yes, but it must be classified on the receiving bank’s books as low-quality assets.
C
Which state receives the reporting and escheatment of unclaimed property?
A. The state where the bank is domiciled, if different from the bank holding company
B. The state of the customer’s last known address, if available and not foreign
C. The state where the property is located, if a deposit account
D. The state chosen by a bank holding company, if a multistate operation
B
State National Bank is a $250 million community bank. It makes a variety of consumer and commercial loans, regularly transmits funds via wire transfers for its customers, and issues commercial and stand-by letters of credit. Which of the following transactions can State National make without checking the OFAC SDN list and without incurring liability?
A. Send a wire transfer via its correspondent bank in New York for a commercial customer.
B. Sell a cashier’s check payable to a third party.
C. Cash an on-us check over-the-counter for a noncustomer.
D. None. The bank can be liable for all.
D
Timothy Edwards inherited some money from his father and decided to put the funds in several accounts at First National Bank. Timothy has an individual savings account with a balance of $1,400,000. He and his wife, Sylvia, have a savings account with a balance of $750,000. They also have a joint NOW account with a balance of $280,000. In addition, they have the following trust accounts for their children, John and Suzanne: Timothy, trustee for John (balance $195,000); Timothy, trustee for Suzanne (balance $195,000); Sylvia, trustee for John (balance $120,000); Sylvia, trustee for Suzanne (balance $120,000). What is the total balance in the accounts of this family that is covered by deposit insurance, assuming a SMDIA of $250,000?
A. $1,380,000
B. $1,660,000
C. $1,130,000
D. $1,140,000
A
Fastfood, Inc., a nationwide restaurant chain, opened an account at First National Bank last year. Fastfood is making daily cash deposits in amounts of $15,000 to $20,000. First National needs to determine if this company is an exempt person. What should the bank do first?
A. Because the restaurant is an established depositor, the bank should provide an unlimited exemption for cash deposits and withdrawals.
B. The bank should look in the newspaper or on the Internet to determine if Fastfood, Inc.’s, stock appears on one of the listed exchanges.
C. The bank should ask the company if it qualifies as a listed business.
D. The bank should perform a corporate records check to determine if the company is chartered in the United States.
B
What should a bank do when it receives a request from a customer to transfer funds to an individual in Iraq?
A. Conduct the transfer as requested
B. Conduct the transfer if the individual and the financial institution are not on the SDN list
C. Block the transfer
D. Conduct the transfer and then notify OFAC immediately
B
For how long must a bank keep records of transactions involving currency in amounts greater than $10,000?
A. Two years
B. Three years
C. Five years
D. Seven years
C
As a general rule under the Right to Financial Privacy Act, what must be provided to a bank before information can be released to the requesting party?
A. A copy of the customer’s driver’s license, passport, or other suitable identification
B. The customer’s telephone number, so oral authorization to release information can be obtained easily
C. A copy of the customer’s written authorization to release information
D. A letter from a government official requesting the information
C
When may the Federal Reserve institute supplemental reserve requirements in addition to the basic reserve requirements?
A. When additional balances are needed for clearing purposes
B. When supplemental reserves are needed to impose monetary policy
C. When additional balances are needed to supplement the regular reserve cost structure
D. When the President directs it by Executive Order
B
Under the Interagency Statement on Retail Sales of Nondeposit Investment Products what disclosure must the banks investment sales representative make to the customer?
A. The bank’s regulatory agency
B. The sales commission resulting from the investment purchase
C. That the investment product is not guaranteed by the bank
D. The arbitration procedure for resolving disputes over investment advice
C
ABC Bank regularly sends email messages to its customers. Some of the emails are promotions for various bank products. Others are notifications of account balances, requested by the customer. John Smith, a customer of the bank, asks not to receive commercial email messages from the bank. What must the bank do?
A. Stop sending any emails to Mr. Smith within 30 days of the request
B. Stop only the advertising emails to Mr. Smith within 30 days of the request
C. Stop sending any emails to Mr. Smith within 10 days of the request
D. Stop sending only the advertising emails to Mr. Smith within 10 days of the request
D
Which of the following is NOT a factor considered by the Federal Reserve Board when it evaluates an application under Regulation Y?
A. The financial strength of the applicant
B. The management strength of the applicant
C. The current nonbanking activities of the applicant
D. The effect of the transaction on competition
C
If a bank receives a request for financial disclosure, how may the bank fulfill this request?
A. Provide copies of the call reports covering the current and previous year
B. Provide a copy of its statement of condition covering the year immediately preceding the request
C. Provide a copy of its most recent, unaudited financial statement
D. Provide copies of its Uniform Bank Performance Reports for three consecutive years
A
A bank that is a government securities broker accepts money from a customer for the purchase of securities on Monday and does not purchase the securities by the end of the day on Tuesday. Does the bank have any responsibilities under the Government Securities Act?
A. No. The bank has fulfilled its responsibilities under the Act.
B. Yes. The bank must purchase the securities before the close of business on Wednesday.
C. Yes. The bank must deposit the money in an account of the customer at the close of business on Tuesday.
D. No. The bank has until the close of business on Wednesday to purchase the securities before being liable to the customer for failure to effect a purchase.
C
Which of the following actions is acceptable under the financial reporting regulations?
A. Attaching a narrative explanation by management of the reasons for a cease and desist order as a part of the annual disclosure
B. Attaching a copy of the bank’s last safety and soundness examination to the annual disclosure
C. Including a statement that indicates that the bank’s regulatory agency has reviewed the financial information
D. Using an unaudited financial statement for the past two years as an annual disclosure statement
A
In which of the following cases would First National Bank be required to give a branch closing notice?
A. Removing its ATM from the local grocery store
B. Opening a deposit-taking facility in a kiosk during a college fair for one weekend
C. Moving its central branch across the street
D. Closing its near-town neighborhood branch
D
Of the following actions, which one is NOT recommended by the OCCs advisory letter as a necessary tool of management oversight of insurance and annuity sales?
A. Hiring competent personnel
B. Establishing a separate insurance agency
C. Auditing systems and controls
D. Requiring a member of management to actively oversee this function
B
Mrs. Evans, a customer of First National Bank, deposits $15,000 in cash to her account. During the transaction, Mrs. Evans explains that she received the money in the mail from her sister in Europe. What responsibility does the bank have?
A. Complete a Currency Transaction Report (CTR)
B. Complete a United States Customs form 4790 (CMIR)
C. Complete both a currency transaction report and a CMIR
D. Complete a CTR and encourage Mrs. Evans to file a CMIR
D
Which of the following institutions is exempt from the coverage of CRA?
A. State National Bank of Ashgrove, a $15 million bank in a rural community, not located in an MSA
B. Trust Company, Inc., an institution offering only trust services located in a large urban area
C. ACME Savings Association, a federal thrift institution located in a medium-sized midwestern city, included in an MSA
D. First National Bank, a $250 million bank located in a rural area, not in an MSA
B
Country A (a foreign country that is boycotting Country B, another foreign country) has ordered goods from ABC, a U.S. corporation. Country A has opened a letter of credit with Overseas, Inc., a foreign bank. The letter of credit specifies that ABC must certify that it does not do business with Country B. Overseas, Inc., sends a telegram to First National Bank, a U.S. bank, stating the major terms and conditions of the letter of credit and asking First National Bank to confirm the letter of credit. The telegram does not state the boycott provisions. Overseas mails the letter of credit to First National Bank and asks First National Bank to confirm it. What may First National Bank do?
A. First National Bank must confirm it if it previously agreed to do so.
B. First National Bank may advise ABC of the letter of credit and administer its disposal, but may not confirm it and must report it to the Department of Commerce and the IRS.
C. First National Bank may do nothing but return the letter of credit to the issuing bank and report to the IRS.
D. First National Bank must confirm the letter of credit but should also report it to the Department of Commerce.
B
Information reports must include which of the following details?
A. Name, address, and TIN of the borrower
B. Purpose of the loan
C. Address of the property securing the mortgage
D. Fair market value of the property at the time of the loan
A
Which of the following is MOST effective in strengthening an anti-money-laundering program involving cash transactions?
A. Review all deposits of $25,000 or more
B. Complete CTR worksheets on all cash transactions of $5,000 or more
C. Complete SAR worksheets on all cash transactions of $5,000 or more
D. Monitor cash transactions of less than $10,000 for suspicious patterns
D
OFAC is an office with which U.S. government agency?
a. State Department
b. Central Intelligence Agency
c. Office of the President
d. U.S. Treasury Department
D
Which of the following bank products is NOT subject to the disclosure provisions of the Interagency Statement on Retail Sales of Nondeposit Investment Products?
A. Fixed-rate annuities
B. Variable-rate annuities
C. Variable-rate savings accounts
D. Mutual funds
C
First National Bankshares, Inc., a bank holding company, held substantially all of the voting stock of an equipment manufacturing corporation as collateral for a loan to the owner. On May 15 the borrower defaulted and on September 1, after proper notice was given, the bank foreclosed its security interest on the stock and exercised its rights to vote the stock at appropriate times. On December 31 the bank transferred the stock to a subsidiary corporation, FNB, Inc., to market the stock for sale more effectively. What is the longest time period that FNB, Inc., can possibly hold the stock?
A. Up to two years from September 1
B. Up to five years from September 1
C. Up to two years from December 31
D. Up to five years from December 31
B
State National Bank has a Web site on which it advertises all of its products. One page of the Web site is devoted to the products of its affiliate, State National Investment Products, Inc. The affiliate sells uninsured mutual funds and various other investments not insured by the FDIC. What are State Nationals responsibilities for this advertising?
A. None. The affiliate is responsible.
B. None. Because it is a Web site, the advertising rules do not apply.
C. The bank must make sure the FDIC logo is properly placed.
D. The bank must make sure that the noninsured disclosures are on this page and that the FDIC logo does not appear
D
In order to qualify for the fraud prevention adjustment an issuer must:
A. Prove that it has historical losses that average at least 1% of its transactions each calendar year
B. Implement fraud prevention and detection policies
C. Offer identify theft protection to its cardholders
D. Allow debit transactions to be processed on at least three unaffiliated payment card networks
B
A bank is planning to sell eight branches. The compliance officer participates on a bank committee to oversee the process. What should be the compliance officers PRIMARY concern?
A. That the bank’s revenues will not be affected severely
B. That the branches are closed in accordance with bank policy
C. That customers of the branches will continue to have access to banking services
D. That the bank’s confidential information is returned to the main office
B
Second National has decided to close one of its less profitable neighborhood branches. Which of the following actions is NOT required of the bank under federal law?
A. Publish a notice of the closing in the local newspaper
B. Send a notice to its regulatory agency
C. Send notices to the branch customers
D. Post a notice at the branch
A
First National Bank is giving away gifts with all new certificates of deposit over $5,000. How must a portable stereo worth $250 be treated on the account disclosure?
A. It is a bonus and, therefore, is considered to be interest and does not have to be disclosed on the account disclosure.
B. It is interest and must be included in the simple interest rate on the account disclosure.
C. It is neither a bonus nor interest and does not have to be disclosed on the account disclosure.
D. It is a bonus, and not interest, and must be disclosed on the account disclosure.
D
Under what circumstances will a G-FINW (a withdrawal as a government securities dealer) become effective in less than 60 days?
A. If the bank requests a shorter time period
B. If the regulatory agency determines that a shorter time period would be appropriate
C. If the bank ceases doing business as a securities dealer
D. If the bank has no employees that qualify as associated persons
B
First State Bank, a state nonmember institution, plans to purchase a company that would be a financial subsidiary of the bank. First State will send a notice to the FDIC of its proposed acquisition. Of the following factors, which one would NOT be relevant to the FDICs consideration of the banks acquisition?
A. First State Bank’s asset size
B. Whether First State Bank is well capitalized
C. First State Bank’s CRA rating
D. The impact of the acquisition on First State Bank’s safety and soundness
A
A bank has a stand-alone ATM in a high crime area. Due to concerns for the safety of individuals using the ATM, management decides to close it. According to branch closing policy statements issued by federal regulators, which of the following actions should the bank take?
A. No action is required because an ATM is not, by definition, a branch.
B. Post a notice at the ATM at least 30 days before the intended closing date.
C. Notify the bank’s federal regulatory agency at least 90 days before the intended closing date.
D. Mail a notice to all customers at least 90 days before the intended closing date.
A
Under the Interagency Statement on Retail Sales of Nondeposit Investment Products, what may a bank teller do?
A. Discuss the past performance of a bank-related mutual fund
B. Transfer mutual fund shares from an investment savings account to an IRA account
C. Take the business card of a customer who has asked to purchase a bank related mutual fund and give it to a licensed representative
D. Assist a customer in determining eligibility to purchase a bank-related mutual fund
C
Which of the following types of security devices is required for each bank, at minimum, under the Bank Protection Act?
A. Full-time security guard
B. Tamper-resistant locks on exterior windows and doors
C. Vault door made of steel that is at least 3 inches thick
D. Bullet-proof glass at all windows
B
Which of the following characteristics is most likely to be considered High Risk for a bank’s BSA/AML risk assessment?
a. The bank has identified a moderate number of high risk customers and businesses
b. Low turnover of key personnel or frontline personnel
c. Bank offers significant international private banking services and products
d. Bank’s customer base is increasing due to acquisitions and new branches
C
ABC Co. signs a contract to export goods to Country G, a boycotting country. Payment will be made by a letter of credit confirmed by First National Bank. The letter of credit requires the goods to be shipped on a ship eligible to enter the port of Country G in conformity with its laws and regulations and that the insurer of the goods has an agent in Country G. Country Gs laws prohibit blacklisted ships from calling at its ports and blacklisted insurance companies from qualifying agents in Country G. First National Bank confirms the letter of credit. Did the banks action constitute an agreement to participate in or cooperate with an international boycott, and is it subject to IRS reporting requirements?
A. Yes. The action is an agreement to cooperate with or participate in a boycott and, yes, it is subject to the reporting requirements.
B. Yes. The action is an agreement to participate in a boycott but no, it is not subject to the reporting requirements.
C. No. Because the bank is not responsible for knowing the laws of Country G, it is not in participation with or in cooperation with a boycott.
D. No. The confirmation of a letter of credit is not sufficient to be in participation or cooperation with a boycott.
A
According to Regulation D, when may interest be paid on money market deposit accounts?
A. At maturity
B. When there are six or fewer preauthorized transfers permitted per month
C. When the deposit is less than $100,000
D. If the financial institution imposes a service charge when there are more than six preauthorized transfers per month
B
When does a gift accepted by a banker clearly violate the Bank Bribery Act?
A. When it is given for personal reasons
B. When it is given with corrupt intent
C. When it is valued at a dollar amount exceeding $50
D. When it is not given in connection with a generally accepted holiday
B
A bank representative is selling insurance products in, or on behalf of, the bank. What may the representative NOT require the customer to do?
A. Pre-pay a portion of the initial premium
B. Complete an application for the insurance on the premises
C. Obtain a medical examination for life insurance coverage
D. Purchase the insurance from an affiliate of the institution
D
The mortgage lending department of Bank XYZ received some inquiries from potential applicants who are visually impaired. The bank would like to comply with ADA concerning these potential applicants, but it does not want to spend a significant amount of money. Which of the following statements is true?
A. The bank must have its loan application and disclosures translated into Braille.
B. The bank may have a loan assistant read each loan application and disclosure document to the applicant and assist in completion of the forms.
C. The bank may require the applicant to bring a sighted friend or relative to the bank to assist in completing the application.
D. The bank may make a policy not to lend money to blind persons.
B
Under the ADA, what can an employer do?
A. Inquire about a disability if the disability is obvious to the interviewer at the time of the job interview
B. Inquire about a disability when offering a job provided the disability is related to the job requirements
C. Refuse to make an accommodation for a disability if 50 persons or fewer are employed
D. Note the disability in the employee’s file so that other managers will be aware of it when interviewing the employee for future position changes
B
If the Department of Homeland Security requests information from a bank for purposes of combating terrorism, which of the following is true?
A. The bank may require a subpoena
B. The bank may inform the customer of the release of information, if asked
C. The bank may request a certificate of compliance with the Right to Financial Privacy Act before providing the information
D. The bank does not have to provide the information until a federal court requires it
C
Bank policies and procedures for check collection must include what procedure to follow when a bank has actual knowledge that checks for restricted transactions have been received from a bank customer:
A. Procedures for determining the action to take, including when the account should be closed
B. Procedures for determining when all checks on the account must be monitored
C. Procedures for circumstances when only certified checks may be accepted
D. Procedures for circumstances when no checks on foreign accounts may be accepted
A
Transactions with which of the following government securities would NOT subject a bank to the registration requirements of the Government Securities Act?
A. Obligations of the Farm Credit System
B. GNMA securities
C. U.S. Savings Bonds
D. FNMA obligations
C
First National Bank has several exempt customers. ﾕ Alpha is an exempt person because its stock is listed on a major stock exchange. ﾕ Beta is an exempt person because it meets the nonlisted customer requirements. ﾕ Zeta is exempt because it is a payroll customer. For which customer(s) must the bank conduct an annual review to determine its continuing eligibility to be exempt from CTR filings? A. Alpha B. Beta C. Zeta D. Alpha, Beta, and Zeta
D
What is the maximum number of government securities transactions a bank may have and still remain exempt from the Government Securities Act?
A. 100 per year
B. 250 per year
C. 400 per year
D. 499 per year
D
When completing and filing a SAR, what is the bank NOT required to do?
A. Submit a copy of the supporting documentation with the SAR
B. Submit the SAR within 30 days of the initial detection of facts
C. Report the SAR information to the bank’s board of directors
D. Maintain a copy of the SAR and supporting documentation for 5 years
A
Which of the following factors would NOT be considered when evaluating whether specific behavior by a banker violates the statute?
A. The social and family ties of the banker
B. The standard for business amenities and entertaining in that particular part of the country
C. Whether there was a demonstrable business purpose
D. Whether a business transaction was consummated as a result
D
State National Bank offers credit life and disability insurance on all consumer loans. This credit-related insurance is sold by a third party, but the bank collects a commission on all sales. The bank also sells hazard insurance through its affiliated insurance agency. Which of the following actions is legal for State National?
A. Require all consumers to purchase credit life insurance through the bank
B. Require only certain consumers to purchase credit life insurance through the bank
C. Require all borrowers with real property loans to provide insurance to protect the collateral
D. Require borrowers on real estate loans over $50,000 to purchase hazard insurance through the bank
C
A compliance officer receives a call from a loan officer who asks for advice on what she should do with a stock certificate (1,437 shares of IBM) from a new loan customer who wants to pledge it in support of a loan that has been approved at your bank. What should the compliance officer tell her FIRST?
A. Retain a copy of the certificate in the loan file
B. Retain the original certificate in the branch vault for the term of the loan
C. Record the certificate information and give the original back to the customer
D. Contact the SIC to determine if the certificate was reported as lost, counterfeit, or stolen
D
By which date must an interest reporting statement be sent to the borrowers last known address?
A. January 15 of the year following the year the interest is paid
B. January 31 of the year following the year the interest is paid
C. February 28 of the year following the year the interest is paid
D. March 1 of the year following the year the interest is paid
B
Which of the following employment practices is NOT legal under ADA?
A. Establishing a policy that prohibits hiring alcoholic applicants
B. Establishing a policy that prohibits smoking at any time at work
C. Holding employees who are certified alcoholics to the same performance standards as other employees
D. Refusing to hire an employee who currently uses illegal drugs
A
Acme Community Bank does NOT disclose any nonpublic personal information about its customers except to its computer processor, its attorneys for loan documentation, and to a national credit reporting agency. What privacy notices is Acme required to give?
A. Initial and annual notices to consumers and customers
B. Initial and annual notices to customers
C. Initial, annual, and opt-out notices to customers
D. Initial, annual, and opt-out notices to customers and consumers
B
Issuing Bank, a foreign bank, maintains an account with First National Bank, a U.S. bank. Issuing Bank issues a letter of credit in favor of ABC, Inc., a U.S. corporation. The letter of credit contains a boycott provision. The letter of credit provides that any negotiating bank may obtain reimbursement from Issuing Bankﾒs account at First National Bank by certifying that the conditions of the letter of credit have been met. Issuing Bank does not send First National Bank a copy of the letter of credit. May First National Bank reimburse negotiating banks for the letter of credit when it contains a boycott provision?
A. Yes. First National Bank did not know of it, so it may reimburse a negotiating bank.
B. No. First National Bank is under a duty to determine the underlying conditions of any letter of credit it pays.
C. No. First National Bank should request a copy of the letter of credit at the time of its payment and then refuse to pay once it is aware of the provision.
D. Yes, provided ABC Company is not a participant in the boycott.
A
Mr. Roberts has three loans at First National Bank: Loan A made to purchase a car, secured by the car; Loan B made to purchase stock, secured by a lake lot; and Loan C made to pay taxes, secured by a rental house he owns. Last year he paid $2,500 in interest on Loan A; $550 in interest on Loan B; and $1,000 in interest on Loan C. How much interest will First National Bank report to the IRS?
A. $4,050
B. $1,000
C. $1,550
D. $2,500
B
The Veterans Administration requested some information from First National Bank regarding a customers loan records. The VA provided the bank with a customer authorization form signed by the customer on March 1. The authorization gave the VA the right to review loan records only from March 1 until June 30. The VA requested records on March 15, April 17, May 22, and June 12. The bank complied with each request and supplied the records. Has the bank complied with the Right to Financial Privacy Act?
A. Yes, provided the records provided relate only to the customer’s loans.
B. Yes, provided the customer has the right to revoke the authorization at any time.
C. No, the authorization was for too lengthy a time period.
D. No, the VA is not covered by the law.
C
Your bank has identified an account that is subject to OFAC sanctions and has blocked the account. What additional responsibilities does the bank have with respect to the blocked account?
a. Transfer the funds to the U.S. Treasury Department within 10 business days
b. Report the blocked account to OFAC within 10 business days
c. Notify the accountholder of the procedures for obtaining an OFAC license
d. Notify your primary regulator
B
First National Bank advises Country A, a boycotting country, on various U.S. investments. Country A instructs First National Bank not to recommend for investment any shares of certain blacklisted companies. First National Bank follows this instruction. Has First National Bank participated or cooperated in an international boycott under the IRS regulations by this action?
A. Yes. The companies are the subject of a boycott.
B. No. The bank may agree not to recommend certain companies.
C. Yes, if the companies are part of a boycott.
D. No, but the bank must report this action to the IRS.
B
Which of the following is NOT an acceptable method of obtaining information under the Right to Financial Privacy Act?
A. A request with customer authorization
B. An administrative subpoena
C. An informal letter
D. A search warrant
C
Regulation II permits an issuer to receive an adjustment of 1 cent to its interchange transaction fee if:
a. It issues only government-administered payment programs and certain reloadable general-use prepaid cards not marketed as gift cards
b. It develops and implements policies and procedures reasonably designed to identify and prevent fraudulent electronic debit transactions
c. It discloses the fee to consumers prior to account opening
d. The transaction is conducted outside the issuer’s home state
B
Which of the following interest-bearing accounts is EXEMPT from Form 1099 annual information reporting requirements under IRS regulations?
A. Time certificates of deposit
B. Money market deposit accounts
C. Individual retirement accounts
D. Negotiable order of withdrawal accounts
C
Under CRA, a large bank has the option to report:
a. Small farm loans
b. Affiliate loans
c. Community Development loans
d. Small business loans
B
First National Bank received the following requests for financial information. For which of them would the bank receive reimbursement for its costs under Regulation S?
A. A summons from the IRS for information on several customer checking accounts
B. A request from the FINRA for records of the bank in connection with an investigation of the bank
C. A request from the GAO for information pursuant to an audit of the Government National Mortgage Association
D. A request from the VA for a customer’s name and address pursuant to an internal VA investigation of the customer’s activities
D
Which of the following is NOT a written record the bank should retain in complying with the Bank Bribery Act?
A. A copy of the bank’s internal code of conduct
B. A list of all gifts received by bank officers during the year
C. Disclosures of unauthorized gifts
D. A list of all bank officers’ outside business interests
B
Which of the following must a ﾓlargeﾔ bank maintain as part of its CRA program? A. A record of director, officer, and employee community involvement, and a listing of loans made to low- and moderate-income individuals B. Description of its assessment area, written comments and responses, and the public portion of the regulator’s most recent CRA performance evaluation C. Copy of the bank’s CRA Notice and the bank’s most recent five years of CRA disclosure statements D. A comprehensive record of all CRA-related training completed by employees during the past two years
B
Which of the following groups of employees should be trained on the detailed use of W-9 forms?
A. Senior management
B. New account officers
C. Auditors and accountants
D. Security officers
B
Under Regulation GG which is a responsibility of regulated depository institutions?
A. Review check transactions on consumer accounts that regularly have large checks deposited
B. Screen ACH transactions of commercial accounts
C. Implement due diligence procedures for new commercial accounts
D. Monitor wire transfer instructions
C
Which of the following bank products are considered to be transaction accounts?
A. A savings account from which the bank pays third parties weekly pursuant to the depositor’s written requests mailed to the bank
B. A savings account from which the customer regularly makes more than six telephone transfers per month
C. A money market certificate of deposit where the interest is credited monthly to another account of the depositor
D. A savings account into which weekly deposits are made from a checking account pursuant to the depositor’s telephone requests
B
A recent audit revealed that the bank’s personal trust division was failing to determine whether securities being accepted from new trust customers have been reported as lost or stolen. To address the root cause of this problem, what should the compliance officer do FIRST?
A. Inquire with the SIC about all securities noted in the audit
B. Contact the bank’s primary regulator to determine the best course of action
C. Retrain all personal trust administrators on the lost and stolen securities requirements
D. Review the policies and procedures for accepting securities in new personal trust relationships to ensure securities verification
D
Which of the following would NOT be acceptable under the Bank Bribery Act and the relevant guidelines?
A. A luncheon paid for by a bank customer after a transaction is closed
B. A gift of a hunting rifle to a loan officer from a borrower at Christmas
C. The gift of a gold watch to a loan officer from a customer who is the loan officer’s cousin
D. An award of a writing pen and pencil set to a bank officer by a civic organization
B
First National Bank does not have the TINs of several borrowers with mortgage loans. What should the bank do to fulfill the mortgage interest reporting regulations?
A. Mail a one-time request for TINs by certified mail to each borrower who has failed to provide one
B. Post a notice in its mortgage lending lobby that TINs are required for mortgage loans
C. Mail a separate request for TINs annually to borrowers who have failed to provide one
D. Include a request for TINs in the annual mailing of the payment coupon book
D
In order to properly release records on the basis of a customer authorization, which of the following must the bank do?
A. Make sure that statement is signed and notarized
B. Record the statement in the official records of the county where the bank is located
C. State that the customer may revoke the authorization at any time before the records are released
D. Have the statement acknowledged by the government agency requesting the records
C
Which of the following is an accurate statement according to the requirements of the customer identification program regulations?
A. A bank must always require documentary verification of a customer’s identification
B. A bank may waive any part of the CIP requirements if senior management approves the waiver and there is a good cause
C. A physical address or a post office box is acceptable for any new customer
D. The bank’s CIP program must enable it to form a reasonable belief about the identity of the person
D
First National Bank (FNB) purchased a table for $500 at the Governorﾒs re-election fundraising dinner last fall. FNB President Sally Holmes tells Mary Watkins, the municipal securities principal, that the bank is planning to participate in the upcoming state highway bond. What does Ms. Watkins tell President Holmes? A. The bank cannot participate without prior approval of the MSRB. B. The bank can participate because national banks are exempt from MSRB rules. C. The bank can participate, provided it includes the contribution on its next disclosure. D. The bank cannot participate within two years of a contribution to the issuer.
D
For which of the following business activities must a bank holding company obtain prior approval of the Federal Reserve Board?
A. Operating an auto club service
B. Serving as a safe deposit company
C. Operating as a management consulting firm for financial institutions
D. Selling installment loan data processing
A
Consider the following deposit balance information:
Ann Jones $50,000
Ann Jones $50,000
Jim Smith and Ann Jones $50,000
Jim Smith $75,000
Ann Jones: Agent for Jim Smith $75,000
Ann Jones and Jim Smith $100,000
TOTAL $400,000
How much of the $400,000 is FDIC insured if the SMDIA is $250,000?
A. $275,000
B. $325,000
C. $350,000
D. $400,000
D
Which of the following must be included in a branch closing notice to a bank’s regulatory agency?
A. Comments from customers who oppose the closing
B. Detailed statement of the reasons for the closing
C. Copy of the notice to be sent to affected customers
D. Copy of board minutes reflecting the decision to close
B
First National Bank has received a request from the Securities and Exchange Commission (SEC) for financial records. The customer has given permission to disclose the information. The bank can be reimbursed at the stated rate for all but one of the following costs. Which cost(s) would NOT be reimbursed?
A. Actual fee paid to an offsite storage facility for retrieving and copying records
B. Employee time spent in retrieving and organizing the records at a rate of $22 per hour
C. Actual costs of the CDs the electronic records will be stored on
D. $500 paid to the bank’s attorney for a review of the SEC request to determine its validity and to advise the bank of its course of action
D
Which of the following is (are) NOT covered by the regulation?
A. All banks regardless of insurance sales.
B. A lender who indicates to the consumer that he or she is selling insurance on behalf of the bank
C. A person to whom the bank refers consumers and who has a contract with the bank to receive commissions on sales of insurance
D. A person who sells insurance to nonconsumers for other than personal, family, or household purposes
D
First National Bank has foreclosed on several loans. One of the loans is not subject to the requirement to submit an information return on the foreclosed property. Which loan is most likely NOT covered by the regulations?
A. A loan to Brown & Associates, a local law firm, to purchase furniture, secured by the furniture
B. A loan to Mrs. Lynch to purchase stereo equipment for use in her office waiting room
C. A loan to Dr. Stevens to purchase kitchen appliances
D. A loan to Mr. and Mrs. Sanders to purchase a computer for their antique shop
C
Of the following situations, which situation does NOT qualify as an exception to the Right to Financial Privacy requirements?
A. When the U.S. attorney is seeking customer records pursuant to the Federal Code of Civil Procedure in a case where the customer and the government are parties
B. When the bank believes that an officer has committed a crime against the bank and supplies information to the FDIC
C. When the OCC is conducting an examination of the financial institution
D. When the Federal Trade Commission (FTC) is seeking financial information on a customer as part of a large investigation for which no charges have yet been issued
D
On a nontransferable certificate of deposit, which of the following activities is NOT allowed?
A. The customer’s certificate is redeemed early owing to his or her death.
B. The customer discounts the certificate on a public market.
C. The customer pledges the certificate against his or her consumer loan.
D. The certificate is redeemed through the judicial action of a creditor exercising its legal remedies under the law.
B
Which of the following activities is permitted under ADA?
A. Issuing a policy against making loans to health care providers who regularly work with infectious patients
B. Prohibiting smoking anywhere in the bank building
C. Providing readers to visually impaired loan applicants for a $15 fee
D. Requiring disabled depositors to use a teller window that is specially constructed for the use of disabled persons
B
First National Bank is attempting to determine which of the following customers would qualify as exempt persons:
Nationwide Foods, Inc., is a national company with stock listed on the New York Stock Exchange
National Paper Products, is a wholly owned subsidiary of Nationwide Foods, Inc.
Products Incorporated, a depositor for three months, is a regional company whose stock is designated a NASDAQ Capital Markets Company and that sells and leases large boats
Century Enterprises, a local company owning several local restaurants, is a long-time bank customer and frequently makes cash deposits in excess of $10,000. All of Centurys stock is owned by a local family.
Which of these customers would qualify as an exempt person?
A. All except for Nationwide Foods, Inc.
B. All except for National Paper Products
C. All except for Century Enterprises
D. All except for Products Incorporated
D
How long after discovery does a bank have to report any lost or missing securities when criminal activity is suspected?
A. 90 calendar days
B. 1 business day
C. Never. Law enforcement must report
D. 10 business days
B
A financial institution will be in compliance with the blocking requirements of Regulation GG if:
A. It monitors debit card transactions to block any Internet gambling transactions
B. It notifies all customers that Internet gambling transactions are illegal
C. It restricts transactions to accept only those not originated on the Internet
D. It relies on compliance procedures implemented by the payment system operator
D
A bank municipal securities dealer has 30 employees in its municipal securities operation. How many municipal securities principals must it have?
A. At least one
B. At least three
C. No more than five
D. At least two
D
In which of the following circumstances is it LEAST appropriate for a bank to file a SAR regarding Internet activity?
A. Bank determines that one of its customers is the victim of identity theft
B. Bank becomes aware of identity theft of its domain name (i.e., another entity selects a name similar to the bank’s in order to confuse customers and obtain confidential financial information)
C. Bank discovers that someone has hacked into its data system in order to obtain confidential customer data
D. Bank determines through its transaction-monitoring program that a customer is making electronic transfers between his own checking and savings accounts that are just below the $10,000 reporting level
D
Which of the following countries are currently subject to the Office of Foreign Assets Control Regulations?
A. North Korea
B. Jordan
C. Bahrain
D. Russia
A
The manager of Main Street branch calls and relates the following information: John Smith purchased a cashiers check for $1,000 cash at 10:00 a.m. on Tuesday. At 11:30 a.m. Mr. Smith returned and purchased a cashiers check for $2,500 cash and deposited travelers checks totaling $9,000 into his checking account. At 4:00 p.m. Mr. Smith returned and deposited $8,000 cash into his checking account. This deposit was after normal banking hours, so it was recorded as of Wednesdays business date. What action should the bank take?
A. None, because no single cash transaction exceeded $10,000
B. File a Currency Transaction Report (CTR) for $11,500
C. Record the $1,000, $2,500, and $9,000 transactions on the bank’s monetary instrument sales log because the total exceeds the $3,000 threshold
D. Record the $1,000 and $2,500 transactions on the bank’s monetary instrument sales log because the total exceeds the $3,000 threshold
D
Which of the following sources is the least desirable to use when monitoring a correspondent banks capital?
A. A national rating agency’s report on the correspondent bank
B. The correspondent bank’s own call report
C. The correspondent bank’s annual report to shareholders
D. A national newspaper’s story on the correspondent bank’s financial condition
D
A customer of the bank has made a request to the CEO for a copy of the bank’s most recent regulatory report of examination. He bases his request on the Disclosure of Financial Information lobby notice. The CEO asked her assistant to get a copy of the report from you to sent to the customer. What should you do?
a. Give the assistant the copy so she can send it to the customer
b. Tell the assistant that you will send it as soon as you verify that the person is really a bank customer
c. Let the assistant know that the bank may not release the exam report to the person because it is prohibited by law
d. Let the assistant know that she should respond to the customer informing him that he can obtain the exam report directly from the regulator of the bank
C
Assuming that the following are interest-bearing accounts at First National Bank and the SMDIA is $250,000:
Jim $250,000
Jim and Fred $180,000
Fred $350,000
Fred and Jim $160,000
Susan and Jim $300,000
How much of Freds money is covered by deposit insurance?
A. $420,000
B. $500,000
C. $350,000
D. $340,000
A
For what can a Federal Reserve Bank be liable when transmitting payment orders through the Fedwire?
A. Consequential damages
B. Interest on funds not properly received
C. Any damages by agreement with the sender
D. Punitive damages not set forth in an agreement
B
On March 1, First National Bank opened three accounts:
1) a savings account for Margaret Nelson, who did not have a TIN but signed a certification that she had applied for one;
2) a money market savings account for Linda Miller, who could not remember her TIN but promised to provide it at the earliest possible date; and
3) a certificate of deposit for John Whiteside, who completed a Form W-9 but provided a TIN with only eight numbers.
Ms. Nelson provided her newly acquired TIN to the bank on April 15, Ms. Miller provided her TIN on April 5, and Mr. Whiteside provided his TIN to the bank on March 10. Interest was paid on all of these accounts on March 31, and the bank withheld 28 percent of the interest payments. On April 20 all the payees requested that the withheld interest be refunded. What should the bank do?
A. Refund the withheld interest to all payees
B. Refund to Ms. Nelson and Mr. Whiteside because the interest was erroneously withheld
C. Refund only to Mr. Whiteside because the interest was erroneously withheld
D. Refund only to Ms. Nelson because the interest was erroneously withheld
B
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?
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.
B
Mammoth Enterprises is a new customer to the bank. It is a wholly owned subsidiary of Mammoth Corporation. Which of the following statements, if true, would make Mammoth Enterprises an exempt customer at the bank?
A. Mammoth Corporation is a London corporation, trading on the London Stock Exchange.
B. Mammoth Corporation is a U.S. corporation with unlisted stock.
C. Mammoth Corporation is a U.S. corporation trading on the American Stock Exchange.
D. Mammoth Enterprises is a U.S. corporation primarily in the investment banking business.
C
