Banking Regulatory Compliance 3

Question 1

What is 'structuring' in the context of banking compliance?

Accepted Answer

Breaking up large cash transactions into smaller amounts to avoid CTR reporting requirements

Answer

Structuring (also called 'smurfing') is the illegal practice of breaking up cash transactions to stay below the $10,000 CTR reporting threshold.

Question 2

Which regulation governs the disclosure requirements for deposit accounts and requires banks to disclose interest rates and fees?

Accepted Answer

Regulation DD

Answer

Regulation DD implements the Truth in Savings Act and requires depository institutions to disclose the terms and conditions of deposit accounts, including interest rates and fees.

Question 3

Under the Equal Credit Opportunity Act (ECOA), which of the following is NOT a prohibited basis for credit discrimination?

Accepted Answer

Credit score

Answer

ECOA prohibits discrimination based on race, color, religion, national origin, sex, marital status, age, or receipt of public assistance — credit score is a legitimate underwriting factor.

Question 4

What is the purpose of a Suspicious Activity Report (SAR)?

Accepted Answer

To alert regulators about potentially illegal financial activity

Answer

SARs are filed by financial institutions to report transactions that appear unusual or potentially related to criminal activity such as money laundering or fraud.

Question 5

The Volcker Rule, part of Dodd-Frank, primarily restricts banks from doing what?

Accepted Answer

Engaging in proprietary trading and owning hedge funds or private equity funds

Answer

The Volcker Rule prohibits banks from proprietary trading (trading for their own profit) and from owning, investing in, or sponsoring hedge funds or private equity funds.

Banking Practice Test

Banking Practice Test

Banking Regulatory Compliance 3