CBP International Banking Practices 2

Question 1

Which international body sets the Basel III capital adequacy standards for banks?

Accepted Answer

Bank for International Settlements

Answer

International Monetary Fund

Answer

World Bank

Answer

Financial Stability Board

Question 2

A US bank receives a demand deposit from a foreign national who is a Politically Exposed Person (PEP). What is the MOST critical immediate step?

Accepted Answer

Apply enhanced due diligence procedures

Answer

Refuse the deposit outright

Answer

Report to FinCEN immediately

Answer

Freeze the funds pending review

Question 3

Under a Confirmed Irrevocable Letter of Credit, who bears the payment obligation if the issuing bank defaults?

Accepted Answer

The confirming bank

Answer

The applicant (buyer)

Answer

The beneficiary (seller)

Answer

The correspondent bank

Question 4

Which SWIFT message type is used for interbank funds transfers (cover payments)?

Accepted Answer

MT 202

Answer

MT 103

Answer

MT 700

Answer

MT 300

Question 5

What is 'transfer pricing' in the context of international banking?

Accepted Answer

The internal rate charged between subsidiaries within a multinational banking group

Answer

The exchange rate used to convert foreign profits

Answer

The fee charged for SWIFT wire transfers

Answer

The spread between bid and ask rates on foreign exchange

Question 6

A documentary collection under URC 522 is best described as:

Accepted Answer

A bank acting as intermediary to transmit documents against payment or acceptance

Answer

A bank guarantee issued on behalf of an importer

Answer

A bank's conditional commitment to pay upon presentation of compliant documents

Answer

An open account arrangement with credit insurance

Question 7

Which term describes the risk that a counterparty in a foreign exchange transaction will fail to deliver the currency sold after the other party has already delivered?

Accepted Answer

Settlement risk (Herstatt risk)

Answer

Translation risk

Answer

Economic exposure

Answer

Basis risk