BMO Industry Regulations & Compliance 2 — Questions and Answers
Question 1: Under the Bank Secrecy Act (BSA), what is the minimum cash transaction amount that triggers a Currency Transaction Report (CTR)?
- $5,000
- $10,000 (Correct answer)
- $25,000
- $50,000
Correct answer: $10,000
Financial institutions must file a CTR for any cash transaction exceeding $10,000 in a single business day.
Question 2: Which regulatory body primarily enforces the Community Reinvestment Act (CRA) for large national banks like BMO?
- FDIC
- CFPB
- OCC (Correct answer)
- NCUA
Correct answer: OCC
The Office of the Comptroller of the Currency (OCC) is the primary regulator for national banks and enforces CRA compliance.
Question 3: What does 'Regulation E' specifically govern in US banking?
- Mortgage lending disclosures
- Electronic fund transfers (Correct answer)
- Reserve requirements
- Securities trading
Correct answer: Electronic fund transfers
Regulation E implements the Electronic Fund Transfer Act and protects consumers engaging in electronic transactions such as ATM and debit card use.
Question 4: A customer refuses to provide identification for a large cash transaction. What is the bank's appropriate response?
- Complete the transaction without documentation
- File a Suspicious Activity Report (SAR) and potentially decline the transaction (Correct answer)
- Ask a supervisor to approve the transaction
- Accept a verbal confirmation of identity
Correct answer: File a Suspicious Activity Report (SAR) and potentially decline the transaction
Refusal to provide ID for a large cash transaction is a red flag requiring a SAR filing and possible transaction refusal under BSA/AML rules.
Question 5: Under the Dodd-Frank Act, which bureau was created to oversee consumer financial protection?
- Financial Stability Oversight Council (FSOC)
- Consumer Financial Protection Bureau (CFPB) (Correct answer)
- Office of Financial Research (OFR)
- Bureau of Consumer Credit
Correct answer: Consumer Financial Protection Bureau (CFPB)
Dodd-Frank created the CFPB in 2010 as the primary federal agency responsible for consumer financial protection.
Question 6: What is the primary purpose of 'Know Your Customer' (KYC) procedures at a bank?
- To improve customer service satisfaction scores
- To prevent money laundering and terrorist financing by verifying customer identities (Correct answer)
- To comply with interest rate disclosure laws
- To collect marketing data for targeted product offers
Correct answer: To prevent money laundering and terrorist financing by verifying customer identities
KYC procedures are an AML/CFT control that requires banks to verify the identity and assess the risk profile of their customers.
Question 7: Which regulation requires banks to provide customers with privacy notices explaining how their personal financial information is shared?
- Regulation Z
- Gramm-Leach-Bliley Act (GLBA) (Correct answer)
- Truth in Savings Act
- Fair Credit Reporting Act
Correct answer: Gramm-Leach-Bliley Act (GLBA)
The GLBA requires financial institutions to explain their information-sharing practices to customers and safeguard sensitive data.
BMO Industry Regulations & Compliance 2
Under the Bank Secrecy Act (BSA), what is the minimum cash transaction amount that triggers a Currency Transaction Report (CTR)?