Banking Exam Awareness 2

Question 1

Which U.S. federal agency is primarily responsible for insuring deposits at commercial banks?

Accepted Answer

FDIC

Answer

The Federal Deposit Insurance Corporation (FDIC) insures deposits up to $250,000 per depositor, per insured bank.

Question 2

What is the primary purpose of the Bank Secrecy Act (BSA)?

Accepted Answer

Prevent money laundering and financial crimes

Answer

The BSA requires financial institutions to assist government agencies in detecting and preventing money laundering.

Question 3

The Community Reinvestment Act (CRA) was designed to prevent which practice?

Accepted Answer

Redlining

Answer

The CRA was enacted to prohibit redlining, where banks refused to lend in minority or low-income neighborhoods.

Question 4

What is 'Know Your Customer' (KYC) in banking?

Accepted Answer

A process to verify the identity and assess risks of customers

Answer

KYC is a compliance process that banks use to verify customer identities and evaluate potential risks of illegal activity.

Question 5

Which financial statement shows a bank's assets, liabilities, and equity at a specific point in time?

Accepted Answer

Balance sheet

Answer

The balance sheet (also called statement of financial position) captures a snapshot of what a bank owns and owes on a given date.

Banking Exam Practice Test