CCB Regulatory Compliance & Risk Management 3 — Questions and Answers
Question 1: Which U.S. federal law prohibits bribery of foreign government officials by U.S. companies and individuals?
- The Sherman Antitrust Act
- The Foreign Corrupt Practices Act (FCPA) (Correct answer)
- The Dodd-Frank Act
- The Robinson-Patman Act
Correct answer: The Foreign Corrupt Practices Act (FCPA)
The Foreign Corrupt Practices Act (FCPA) of 1977 prohibits U.S. persons and companies from bribing foreign officials to obtain or retain business.
Question 2: In a three-lines-of-defense model, who constitutes the SECOND line of defense?
- Business units and operational management
- Risk management and compliance functions (Correct answer)
- Internal audit
- External auditors and regulators
Correct answer: Risk management and compliance functions
The second line of defense consists of risk management and compliance functions that oversee and challenge the first line's risk-taking activities.
Question 3: A 'suspicious activity report' (SAR) under the BSA must be filed within how many days of initial detection of suspicious activity?
- 15 days
- 30 days (Correct answer)
- 60 days
- 90 days
Correct answer: 30 days
Financial institutions must file a SAR within 30 calendar days of initial detection of facts that may constitute suspicious activity.
Question 4: Which risk treatment option involves shifting the financial impact of a risk to a third party?
- Risk avoidance
- Risk reduction
- Risk transfer (Correct answer)
- Risk acceptance
Correct answer: Risk transfer
Risk transfer shifts the financial burden of a risk to another party, typically through insurance policies or contractual agreements.
Question 5: The OFAC sanctions program primarily requires organizations to:
- File currency transaction reports for large cash payments
- Screen transactions and parties against prohibited persons and entities lists (Correct answer)
- Conduct annual third-party audits of all business partners
- Report all cross-border transactions exceeding $10,000
Correct answer: Screen transactions and parties against prohibited persons and entities lists
OFAC requires organizations to screen customers, vendors, and transactions against its Specially Designated Nationals (SDN) and other sanctions lists.
Question 6: What is the primary purpose of a Business Continuity Plan (BCP) in the context of risk management?
- To eliminate all operational risks
- To ensure critical business functions continue during and after a disruptive event (Correct answer)
- To document regulatory violations and their remediation
- To assess vendor compliance with contractual obligations
Correct answer: To ensure critical business functions continue during and after a disruptive event
A BCP ensures that essential business functions can continue or be quickly restored during disruptions such as natural disasters, cyberattacks, or other crises.
Question 7: Which consumer protection law requires lenders to clearly disclose the Annual Percentage Rate (APR) and other loan terms to borrowers?
- The Equal Credit Opportunity Act (ECOA)
- The Truth in Lending Act (TILA) (Correct answer)
- The Fair Debt Collection Practices Act (FDCPA)
- The Community Reinvestment Act (CRA)
Correct answer: The Truth in Lending Act (TILA)
The Truth in Lending Act (TILA) requires creditors to disclose the cost of credit in a standardized manner, including the APR, to enable consumers to compare loan terms.
CCB Regulatory Compliance & Risk Management 3
Which U.S. federal law prohibits bribery of foreign government officials by U.S. companies and individuals?