CBA Regulatory Compliance Auditing Questions and Answers

Question 1

An auditor reviewing a bank's daily cash transaction logs notices a commercial customer, who owns a chain of convenience stores, has multiple employees making separate cash deposits of $9,500 at different branches on the same day.
This pattern is a significant red flag for which potential regulatory violation?

Accepted Answer

Structuring transactions to evade Currency Transaction Report (CTR) filing requirements.

Answer

Inadequate segregation of duties in cash handling.

Answer

A violation of the Expedited Funds Availability Act (Regulation CC).

Answer

Failure to perform adequate OFAC screening on new employees.

Question 2

When performing a compliance audit of a bank's Office of Foreign Assets Control (OFAC) program, what is the auditor's primary objective?

Accepted Answer

To assess the effectiveness of the bank's system for identifying and blocking transactions with sanctioned individuals, entities, and countries.

Answer

To verify that the bank's lending practices are fair and non-discriminatory across all demographics.

Answer

To ensure the accuracy of consumer disclosures for mortgage and loan products.

Answer

To confirm the bank is sufficiently meeting the credit needs of low- and moderate-income neighborhoods.

Question 3

During an audit of closed-end mortgage loans, an auditor notes that a borrower's final Closing Disclosure showed an Annual Percentage Rate (APR) that was 0.15% higher than the APR on the initial Loan Estimate. The loan was closed without issuing a revised disclosure and providing a new three-day waiting period. This practice is most likely a violation of which consumer protection regulation?

Accepted Answer

Regulation Z (Truth in Lending Act)

Answer

Regulation B (Equal Credit Opportunity Act)

Answer

Regulation E (Electronic Fund Transfer Act)

Answer

The Community Reinvestment Act (CRA)

Question 4

Which of the following activities is a primary focus for an auditor when evaluating a bank's compliance with the Community Reinvestment Act (CRA)?

Accepted Answer

Assessing the bank's performance in meeting the credit needs of its entire community, including low- and moderate-income (LMI) neighborhoods.

Answer

Evaluating the adequacy of the bank's capital reserves in relation to its risk-weighted assets.

Answer

Testing the effectiveness of the bank's cybersecurity controls for its online and mobile banking platforms.

Answer

Confirming the accuracy and timeliness of Suspicious Activity Report (SAR) filings.

Question 5

A compliance auditor's data analysis of a bank's underwriting decisions reveals that a minimum loan amount policy, while applied consistently to all applicants, results in a statistically significant higher rate of denials for applicants in a protected class. This scenario is an example of what type of potential discrimination?

Accepted Answer

Disparate impact

Answer

Overt discrimination

Answer

Redlining

Answer

Disparate treatment

Question 6

According to regulatory guidance, an effective Compliance Management System (CMS) is built upon several key pillars. Which of the following is considered the foundational component that establishes the 'tone at the top' for compliance?

Accepted Answer

Board and management oversight.

Answer

Comprehensive consumer complaint response procedures.

Answer

A detailed schedule for compliance training.

Answer

The selection of third-party compliance software.