CBP Compliance, Risk and Regulations 5

Question 1

Which Basel III liquidity standard requires banks to hold enough high-quality liquid assets to survive a 30-day stress scenario?

Accepted Answer

Liquidity Coverage Ratio (LCR)

Answer

The LCR requires banks to maintain a stock of unencumbered high-quality liquid assets sufficient to cover net cash outflows over a 30-day stress period.

Question 2

When a bank structures transactions to avoid CTR reporting thresholds, this practice is known as:

Accepted Answer

Structuring (smurfing)

Answer

Structuring, also called smurfing, involves deliberately breaking up large cash transactions into smaller amounts to avoid BSA reporting requirements, which is itself a federal crime.

Question 3

A bank's risk appetite statement primarily serves what purpose in enterprise risk management?

Accepted Answer

Defining the amount and type of risk the bank is willing to accept in pursuit of its objectives

Answer

A risk appetite statement articulates the level and types of risk the board and management are willing to accept, guiding risk-taking across the organization.

Question 4

Under the Dodd-Frank Act, which entity has primary supervisory authority over nonbank financial companies designated as systemically important?

Accepted Answer

Federal Reserve Board

Answer

Dodd-Frank grants the Federal Reserve Board supervisory and regulatory authority over nonbank financial companies designated as systemically important by FSOC.

Question 5

Which of the following is considered a 'red flag' indicator of potential trade-based money laundering (TBML)?

Accepted Answer

Significant over- or under-invoicing of goods compared to market value

Answer

TBML often involves mispriced trade invoices—either over- or under-valued—to transfer value across borders while disguising it as legitimate trade.

(CBP) Certified Banking Professional Practice Test

(CBP) Certified Banking Professional Practice Test

CBP Compliance, Risk and Regulations 5