Banking Ethics in Banking 2

Question 1

A bank employee discovers that a longtime client is structuring cash deposits just below the $10,000 reporting threshold. What should the employee do?

Accepted Answer

File a Suspicious Activity Report (SAR) with FinCEN

Answer

Structuring deposits to evade CTR requirements is illegal, and bank employees must file a SAR when they suspect such activity.

Question 2

Under the CFA Institute Code of Ethics, which behavior best demonstrates the duty of loyalty to clients?

Accepted Answer

Placing client interests ahead of personal gain in all transactions

Answer

The duty of loyalty requires placing client interests above personal benefit and institutional interests at all times.

Question 3

A bank loan officer approves a mortgage for a friend with a weaker credit profile than required, without disclosing the relationship. This is an example of:

Accepted Answer

A conflict of interest

Answer

Approving a loan for a personal acquaintance while hiding the relationship is a textbook conflict of interest that violates ethical and regulatory standards.

Question 4

Which federal law primarily governs anti-money laundering (AML) compliance obligations for U.S. banks?

Accepted Answer

Bank Secrecy Act (BSA)

Answer

The Bank Secrecy Act requires financial institutions to maintain records and file reports that help detect and prevent money laundering.

Question 5

What does 'know your customer' (KYC) compliance primarily aim to prevent?

Accepted Answer

Money laundering, fraud, and terrorist financing

Answer

KYC procedures verify client identities and assess risk to prevent the financial system from being used for illicit activities.

Banking Practice Test

Banking Practice Test

Banking Ethics in Banking 2