Banking Regulatory Compliance 4

Question 1

What is 'Tier 1 capital' in the context of Basel III bank capital requirements?

Accepted Answer

Core capital including common equity and disclosed reserves

Answer

Tier 1 capital represents a bank's core capital base — primarily common equity Tier 1 (CET1) plus additional Tier 1 instruments — used to absorb losses on a going-concern basis.

Question 2

Under the Home Mortgage Disclosure Act (HMDA), what must mortgage lenders report?

Accepted Answer

Data on mortgage applications, originations, and purchases including demographic information

Answer

HMDA requires covered lenders to collect and report detailed data on mortgage applications and originations, including applicant demographics, to help identify potential discrimination.

Question 3

What is the main function of the Financial Crimes Enforcement Network (FinCEN)?

Accepted Answer

Collecting and analyzing financial transaction data to combat money laundering and terrorism financing

Answer

FinCEN is a bureau of the U.S. Treasury Department that collects and analyzes financial transaction reports to support law enforcement efforts against money laundering, terrorism financing, and other financial crimes.

Question 4

Under the CARD Act of 2009, credit card companies must provide how many days' advance notice before changing key account terms?

Accepted Answer

45 days

Answer

The Credit Card Accountability Responsibility and Disclosure Act requires card issuers to provide at least 45 days' advance notice before making significant changes to interest rates, fees, or other key terms.

Question 5

Which of the following best describes 'redlining' in banking?

Accepted Answer

Refusing to provide financial services to residents of certain geographic areas based on race or ethnicity

Answer

Redlining is the discriminatory practice of denying or limiting financial services to specific neighborhoods based on the racial or ethnic composition of those communities.

Banking Practice Test

Banking Practice Test

Banking Regulatory Compliance 4