Banking Exam General 5

Question 1

What is 'structuring' (also known as 'smurfing') in the context of banking regulations?

Accepted Answer

Breaking up large cash transactions into smaller ones to evade reporting requirements

Answer

Structuring involves deliberately splitting deposits or withdrawals into smaller amounts to avoid the $10,000 CTR filing threshold, which is itself a federal crime.

Question 2

Which of the following is a key function of the Federal Reserve in the U.S. banking system?

Accepted Answer

Setting the federal funds rate to influence monetary policy

Answer

The Federal Reserve sets the federal funds rate target and uses monetary policy tools to manage inflation and employment.

Question 3

What is a 'Suspicious Activity Report' (SAR)?

Accepted Answer

A confidential report banks file with FinCEN when they detect potentially illegal activity

Answer

Banks are required to file SARs with the Financial Crimes Enforcement Network (FinCEN) when they suspect transactions involve money laundering or other illegal activity.

Question 4

Which of the following credit scores is generally considered the minimum for qualifying for a conventional mortgage?

Accepted Answer

620

Answer

Most conventional mortgage lenders require a minimum credit score of 620, though better scores yield lower interest rates.

Question 5

What does 'escrow' mean in a mortgage context?

Accepted Answer

An account held by a third party to manage funds for property taxes and insurance

Answer

An escrow account collects portions of each mortgage payment to ensure property taxes and homeowner's insurance are paid on time.

Banking Exam Practice Test

Banking Exam Practice Test

Banking Exam General 5