CBP Compliance, Risk and Regulations 4

Question 1

What is 'concentration risk' in a bank's loan portfolio?

Accepted Answer

Risk from excessive exposure to a single borrower, sector, or geography

Answer

Concentration risk arises when a bank has large exposures to a single entity, industry, or region, meaning a downturn in that area could cause outsized losses.

Question 2

Which regulation implements the Fair Housing Act's provisions prohibiting discrimination in residential mortgage lending?

Accepted Answer

Regulation C

Answer

Regulation C implements the Home Mortgage Disclosure Act (HMDA), requiring lenders to collect and report data used to identify discriminatory lending patterns.

Question 3

A Suspicious Activity Report (SAR) must generally be filed within how many calendar days of detecting a suspicious transaction?

Accepted Answer

30 days

Answer

FinCEN rules require banks to file a SAR within 30 calendar days of initially detecting suspicious activity, or 60 days if no suspect is identified.

Question 4

Which component of Basel III was specifically introduced to address systemic risk during periods of economic stress?

Accepted Answer

Countercyclical capital buffer

Answer

The countercyclical capital buffer requires banks to build up extra capital during credit booms to absorb losses during downturns, reducing procyclicality.

Question 5

Under the Equal Credit Opportunity Act (ECOA), which action by a lender is explicitly prohibited?

Accepted Answer

Discriminating against an applicant based on marital status

Answer

ECOA prohibits credit discrimination on the basis of race, color, religion, national origin, sex, marital status, age, or receipt of public assistance.

(CBP) Certified Banking Professional Practice Test

(CBP) Certified Banking Professional Practice Test

CBP Compliance, Risk and Regulations 4