Banking Exam Banking Regulations and Compliance 5

Question 1

Under the Gramm-Leach-Bliley Act (GLBA), what must financial institutions provide to customers regarding their privacy policies?

Accepted Answer

Annual privacy notices explaining information sharing practices

Answer

The GLBA requires financial institutions to provide customers with annual privacy notices describing what information is collected and how it may be shared with third parties.

Question 2

Which regulation governs the availability of funds deposited into bank accounts and limits how long banks can place holds on checks?

Accepted Answer

Regulation CC

Answer

Regulation CC implements the Expedited Funds Availability Act, setting maximum hold periods for deposited checks and requiring disclosure of funds availability policies.

Question 3

What is the primary purpose of the Net Stable Funding Ratio (NSFR) under Basel III?

Accepted Answer

Ensure banks have stable funding over a one-year horizon

Answer

The NSFR requires banks to maintain stable funding sources relative to their assets over a one-year period to reduce long-term liquidity risk.

Question 4

An examiner finds that a bank's BSA/AML program lacks adequate independent testing. Under which BSA/AML program pillar does this deficiency fall?

Accepted Answer

Independent testing (audit)

Answer

The four pillars of a BSA/AML compliance program are: policies and procedures, a designated BSA officer, employee training, and independent testing—the audit function that identifies program gaps.

Question 5

Which federal law requires banks to establish programs to verify the identity of customers opening new accounts?

Accepted Answer

The Patriot Act's Customer Identification Program (CIP) rules

Answer

Section 326 of the USA PATRIOT Act requires banks to implement Customer Identification Programs to verify the identity of individuals opening accounts.

Banking Exam Practice Test

Banking Exam Practice Test

Banking Exam Banking Regulations and Compliance 5