CAM Regulatory Compliance 3 — Questions and Answers
Question 1: The Dodd-Frank Wall Street Reform Act established which new consumer protection agency?
- FINRA
- CFPB (Correct answer)
- FDIC
- CFTC
Correct answer: CFPB
The Consumer Financial Protection Bureau (CFPB) was created by Dodd-Frank to regulate consumer financial products and services.
Question 2: Under the Equal Credit Opportunity Act (ECOA), how long must a creditor retain records for a completed credit application?
- 12 months
- 25 months (Correct answer)
- 36 months
- 60 months
Correct answer: 25 months
ECOA requires creditors to retain records of credit applications and actions for 25 months (12 months for business credit).
Question 3: A compliance officer discovers that a branch has been charging higher rates to minority applicants with equivalent credit profiles. This most likely violates:
- The Bank Secrecy Act
- The Fair Housing Act and ECOA (Correct answer)
- Regulation CC
- The Right to Financial Privacy Act
Correct answer: The Fair Housing Act and ECOA
Disparate pricing based on race violates both ECOA and the Fair Housing Act, which prohibit discriminatory lending practices.
Question 4: Which provision of Regulation E protects consumers using electronic fund transfer services against unauthorized transactions?
- The error resolution procedure (Correct answer)
- The Expedited Funds Availability rule
- The opt-in requirement for overdraft
- The right of rescission
Correct answer: The error resolution procedure
Regulation E's error resolution procedures require institutions to investigate and resolve reported unauthorized EFT transactions within set timeframes.
Question 5: Under the Gramm-Leach-Bliley Act (GLBA), financial institutions must provide customers a privacy notice:
- Only upon account opening
- Annually and when privacy practices change materially (Correct answer)
- Every five years
- Only when sharing data with third parties
Correct answer: Annually and when privacy practices change materially
GLBA requires institutions to give customers an initial notice at account opening and an annual privacy notice thereafter.
Question 6: The Office of Foreign Assets Control (OFAC) maintains the Specially Designated Nationals (SDN) list. A financial institution that processes a payment to an SDN may face:
- Only internal disciplinary action
- Civil and criminal penalties (Correct answer)
- A mandatory audit by the FDIC
- A temporary license suspension
Correct answer: Civil and criminal penalties
OFAC violations can result in both civil monetary penalties and criminal prosecution, regardless of intent.
Question 7: Which regulation requires financial institutions to establish a Customer Identification Program (CIP) to verify the identity of account holders?
- Regulation O
- USA PATRIOT Act Section 326 (Correct answer)
- Sarbanes-Oxley Act Section 302
- Regulation D
Correct answer: USA PATRIOT Act Section 326
Section 326 of the USA PATRIOT Act mandates that financial institutions implement CIP procedures to verify customer identities.
CAM Regulatory Compliance 3
The Dodd-Frank Wall Street Reform Act established which new consumer protection agency?