Rules and Regs Flashcards
BSA 4 Pillars?
IIBT
Internal Controls
Independent Testing
BSA Officer
Training
What are the 3 prohibitions under 348?
Community - offices in same community
Relevant metropolitan statistical area (RMSA) - same RMSA and each bank has TA of $50MM or more
Major Assets - MO of a bank with TA $2.5B cant serve as a MO of an unaffiliated bank with TAs over $1.5B, regardless of location
What are the elements of a R/E Lending Policy? (part 365)
DRUM LAD
Diversification standards
Reporting requirements
Underwriting standards
Monitoring R/E markets within the bank’s lending area
Loan administration procedures
Approval process
Documentation Standards
A management report for a 1B bank must include
statement identifying IC framework used by M to evaluate the effectiveness of the bank’s IC over financial reporting
Statements that the assessment included controls over the preparations of regulatory financial statements
Statement expressing M conclusions as to whether the bank’s IC over financial reporting is effective
What are exemptions under 348?
Small market share exemption - (1) interlock not prohibited by Major Assets prohibition, and (2) the banks and their depository institution affiliates hold in aggregate no more than 20% of the deposits in the community or RMSA
General exemptions - wont result in monopoly or substantial lessening of competition and no S&S concerns
Audit committee structure?
$500MM-999MM: made up of outside D with a majority that are independent of M
$1B: All outside D
$3B: Include members with banking or related financial management expertise (2 members), have access to their own counsel, not include any large customer of the bank.
What are the exceptions to indemnification payments?
B determined that the IAP acted in good faith
Expense won’t materially affect the bank
it’s not a prohibited indemnification payment (CMP, final order removing IAP, IAP requited to C&D)
IAP agrees in writing to reimburse the bank or HC, and
IAP can present their case to the Board, but they cant be present when the Board discusses and decides
BSA requirements under 326
BSA Compliance Program must be written, approved by the B, and noted in the minutes
CIP must be implemented under the BSA Compliance Program
What are the operational and managerial standards under part 364 appendix A?
ILC ICAE
Internal Controls, ISs, and IA system
Loan documentation
Credit underwriting
Interest rate exposure
Asset quality/growth
Earnings
Compensation, fees, and benefits
What are the exceptions to a golden parachute payment?
Must meet 1 condition
Primary federal regulator approved and FDIC approves
Bank hires a White Knight to become an IAP when the bank or HC is in a TC and consent from primary federal regulator and FDIC
Payment constitutes a reasonable severance, up to 12 months, in the event of a change of control of the bank, obtain consent from primary federal regulator before making payment
Must meet one of the above conditions and the following condition
Bank doesn’t have any evidence that the IAP:
Committed a fraudulent act, breach of trust or fiduciary duty, or insider abuse.
Responsible for the bank’s insolvency or TC
Materially violated any federal or state banking laws or regs
Violated or conspired to violate certain sections of Title 18 of the USC
What must a management report contain (part 363)?
Statement of M’ responsibilities for:
preparing the annual FS
establishing an adequate IC structure
procedures for financial reporting
Complying with laws and regs
An assessment by M of the bank’s compliance with laws and regs during the year.
What is the purpose of 359?
Limits troubled institutions from entering into contracts to pay or make a golden parachute payment to their IAPS.
Also, limits all institutions regardless of health from indemnifying an IAP
When do B need to designate a security officer? how many days does the SO have to development a program?
Designate a SO upon issuance of deposit insurance
Development and administration of a written SP must occur within 180 days.
What is a MO per 348
SAD BAT
Senior EO
Advisory or honorary director with TAs of $100MM or more
Director
Branch Manager
Any person who has a representative or a nominee serving in any of the capacities outlined
Trustee
What is a golden parachute?
Payment or any agreement to make payment to an IAP which is contingent on the termination of that person’s employment and is received when the institution is troubled.
What does insurance not cover for 359?
Judgments and penalties
What is the grace period for brokered deposits for a bank that is in conservatorship?
90-day grace period once the institution was placed in conservatorship. After which, no BD are allowed
Physical security requirements/devices?
CLAM TIO
Camera
Lighting systems (around vault)
Alarm system
Means of protecting cash (vault)
Tamper-resistant locks
Identification devices (pre-recorded serial-numbered bills, chemical devices)
Other devices deemed appropriate
Part 350
When must the annual financial disclosure be made public? What must it contain?
Made public by March 31st
Contain 4 Items:
Most recent Call report, or at least RC, RC-I, RC-N (PD&NA)
Other info required from FDIC
Optional info M considers important for the public
Advise that FDIC hasn’t reviewed the info contained
What is the purpose of 348?
Management Official Interlocks - to foster competition by generally prohibiting a management official from serving 2 nonaffiliated depository orgs where a management interlock will likely have an anti-competitive effect
Under Appendix B of part 364, what must an ISP be designed to do?
PEPE
Protect against any anticipated threats or hazards to the security or integrity of such info
Ensure the security and confidentiality of customer info
Protect against unauthorized access to, or use of such info, that could result in substantial harm or inconvenience to any customers
Ensure the proper disposal of customer info and consumer info
Filing requirements for 363?
2 copies of audited FS, independent PA’s report, management report and if $1B or more, the PA attestations on M assessment concerning the bank IC and procedures for financial reporting.
What are the areas that need procedures under a SP?
PRO SIPS
Preservation of evidence that may aid in the identification and prosecution of criminals
Retaining a record of any robbery, burglary, or larceny committed against the bank
Opening and closing for business
Safekeeping of all currency, negotiable securities, and similar valuables
Identification of criminals committing crimes against the bank
Periodic training
Selecting, testing, operating, and maintaining appropriate security devices
What kind of loans are exempt from supervisory LTV guidelines? (Part 365)
Government (Federal/State) guaranteed loans
Loans sold in the secondary market promptly after origination without recourse
Loans renewed, refi, or restructured w/o the advancement of new funds or increase in line of credit (except for reasonable closing costs);
or loans under a workout program either with or without the advancement of new funds
What are the two S&;S standards for all banks? (364 Appendix A)
Operational and Managerial Standards
Prohibition on Compensation that constitutes a U/U practice
Requirements to extend bank examination to a 18 month cycle
TA less than $500MM
Well Capitalized
M and Composite rating of 1 or 2
Not subject to a formal enforcement proceeding or order
No person acquired control during the preceding 12-month period.
What are the rebuttable presumptions that an interlock will not result in a monopoly or substantial lessening of competition?
Primarily serves low and moderate income areas
Controlled or managed by people who are women or minorities
Bank has been chartered for less than 2 years, or
Deemed in troubled Condition
Rebuttable presumption is good for 3 years.
What is the timeline for a MO who is serving at two banks to have to leave a bank if there is a change in circumstance?
15 months
What are the development and implementation steps of an ISP under Appendix B of 364
M-ROMA
Must involved the B - approve and oversee
Report to B annually
Oversee service provider arrangements
Manage and control risk
Assess Risk
What does 326 cover?
Subpart A-Min Security Devices
Subpart B- BSA
