BMO Industry Regulations & Compliance 3 — Questions and Answers
Question 1: Under Regulation CC, what is the maximum hold period a bank may place on a local check deposit for a new account (open less than 30 days)?
- 1 business day
- 2 business days
- 5 business days
- 9 business days (Correct answer)
Correct answer: 9 business days
New account exception under Regulation CC allows banks to hold local checks for up to 9 business days.
Question 2: Which FFIEC guidance establishes expectations for banks' IT risk management and cybersecurity?
- Basel III framework
- FFIEC Cybersecurity Assessment Tool (CAT) (Correct answer)
- SOX Section 404
- NIST Framework only
Correct answer: FFIEC Cybersecurity Assessment Tool (CAT)
The FFIEC Cybersecurity Assessment Tool helps institutions identify their cybersecurity risks and determine their preparedness.
Question 3: Under the Equal Credit Opportunity Act (ECOA), which of the following is a prohibited basis for denying credit?
- Insufficient income
- Poor credit history
- National origin (Correct answer)
- High debt-to-income ratio
Correct answer: National origin
ECOA prohibits discrimination in credit decisions based on national origin, race, sex, religion, and other protected characteristics.
Question 4: What is 'structuring' in the context of AML compliance?
- Organizing loan terms to minimize interest payments
- Breaking up transactions to avoid currency reporting thresholds (Correct answer)
- Structuring employee access to banking systems
- Creating shell companies to hold assets
Correct answer: Breaking up transactions to avoid currency reporting thresholds
Structuring ('smurfing') involves deliberately breaking large cash transactions into smaller amounts to evade CTR filing requirements, which is a federal crime.
Question 5: Basel III capital requirements mandate that banks maintain a minimum Common Equity Tier 1 (CET1) ratio of:
- 2.5%
- 4.5% (Correct answer)
- 6.0%
- 8.0%
Correct answer: 4.5%
Basel III requires banks to hold a minimum CET1 ratio of 4.5% of risk-weighted assets to ensure financial stability.
Question 6: When must a bank file a Suspicious Activity Report (SAR) after detecting suspicious activity?
- Immediately upon detection
- Within 15 calendar days
- Within 30 calendar days (Correct answer)
- Within 90 calendar days
Correct answer: Within 30 calendar days
BSA regulations require banks to file a SAR within 30 calendar days of detecting a suspicious transaction, or 60 days if no suspect is identified.
Question 7: Under RESPA, which document must lenders provide to mortgage applicants within three business days of application?
- Truth-in-Lending disclosure
- Loan Estimate (Correct answer)
- Closing Disclosure
- Good Faith Estimate
Correct answer: Loan Estimate
RESPA and TILA require lenders to provide a Loan Estimate within three business days of receiving a mortgage application.
BMO Industry Regulations & Compliance 3
Under Regulation CC, what is the maximum hold period a bank may place on a local check deposit for a new account (open less than 30 days)?