Banking Exam Banking Regulations and Ethics 3 — Questions and Answers
Question 1: What is the primary purpose of the Volcker Rule enacted under Dodd-Frank?
- Restrict banks from charging excessive fees
- Prohibit banks from proprietary trading and owning hedge funds (Correct answer)
- Require banks to hold higher capital reserves
- Mandate annual stress testing for all banks
Correct answer: Prohibit banks from proprietary trading and owning hedge funds
The Volcker Rule prohibits bank holding companies from engaging in proprietary trading and from owning or investing in hedge funds or private equity funds.
Question 2: Under the Fair Debt Collection Practices Act (FDCPA), a debt collector may NOT contact a debtor:
- At the debtor's place of employment if permitted
- Between 8 a.m. and 9 p.m. local time
- Before 8 a.m. or after 9 p.m. local time (Correct answer)
- By written correspondence only
Correct answer: Before 8 a.m. or after 9 p.m. local time
The FDCPA prohibits debt collectors from contacting debtors before 8 a.m. or after 9 p.m. in the debtor's local time zone.
Question 3: A Suspicious Activity Report (SAR) must be filed within how many days of detecting suspicious activity?
- 15 days
- 30 days (Correct answer)
- 45 days
- 60 days
Correct answer: 30 days
Financial institutions must file a SAR within 30 calendar days of initially detecting suspicious activity, or 60 days if no suspect is identified.
Question 4: Which ethics principle requires bank employees to maintain client confidentiality and not disclose account information to unauthorized parties?
- Integrity
- Fiduciary duty
- Duty of confidentiality (Correct answer)
- Non-maleficence
Correct answer: Duty of confidentiality
The duty of confidentiality obligates bank employees to protect customer information and not disclose it to unauthorized individuals or entities.
Question 5: The Truth in Lending Act (TILA) primarily requires lenders to disclose:
- The lender's profit margin on loans
- The annual percentage rate and total cost of credit (Correct answer)
- The borrower's credit score used in underwriting
- The lender's funding source for the loan
Correct answer: The annual percentage rate and total cost of credit
TILA mandates disclosure of the annual percentage rate (APR) and total cost of credit so consumers can compare loan offers effectively.
Question 6: Which federal agency is primarily responsible for enforcing anti-money laundering (AML) regulations in the U.S.?
- Securities and Exchange Commission
- Financial Crimes Enforcement Network (FinCEN) (Correct answer)
- Office of Thrift Supervision
- National Credit Union Administration
Correct answer: Financial Crimes Enforcement Network (FinCEN)
FinCEN, a bureau of the U.S. Treasury Department, is the primary agency responsible for implementing and enforcing AML regulations under the BSA.
Question 7: Under the Americans with Disabilities Act (ADA), banks are required to:
- Waive all fees for disabled customers
- Provide equal access to banking services for people with disabilities (Correct answer)
- Hire a minimum percentage of disabled employees
- Offer specialized loan products for disabled customers
Correct answer: Provide equal access to banking services for people with disabilities
The ADA requires banks to provide equal access to their services and facilities for people with disabilities, including accessible ATMs and branch accommodations.
Banking Exam Banking Regulations and Ethics 3
What is the primary purpose of the Volcker Rule enacted under Dodd-Frank?