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Regulatory Compliance Auditing Flashcards

7 cards from real CBA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Regulatory Compliance Auditing flashcards as text

  1. Which risk-based approach element requires banks to assess the specific money laundering risks posed by their products, services, customers, and geographic locations?

    Answer: Risk Assessment

    A BSA/AML Risk Assessment evaluates the institution's inherent risk exposure across products, customers, services, and geographies to drive compliance program design.

  2. Under FinCEN's Customer Due Diligence (CDD) Rule, what is required when a legal entity customer opens a new account?

    Answer: Collection of beneficial ownership information for individuals owning 25% or more

    FinCEN's CDD Rule requires banks to identify and verify the identity of individuals who own 25% or more of a legal entity customer.

  3. An auditor is reviewing a bank's Suspicious Activity Report (SAR) process. Which finding is MOST problematic?

    Answer: Staff notifying customers that a SAR was filed on their account

    Tipping off customers that a SAR has been filed is prohibited by federal law and could result in criminal liability for bank employees.

  4. Regulation Z's right of rescission applies to which type of consumer credit transaction?

    Answer: Non-purchase money mortgages using the primary residence as collateral

    The right of rescission under Regulation Z applies to non-purchase money transactions secured by the consumer's principal dwelling, giving borrowers 3 business days to cancel.

  5. Which of the following best describes 'layering' in the context of money laundering?

    Answer: Separating illicit funds from their source through complex financial transactions

    Layering is the second stage of money laundering, involving complex financial transactions designed to obscure the audit trail and distance funds from their illegal source.

  6. When reviewing a bank's fair lending compliance, which analytical technique compares the treatment of similarly situated applicants across different demographic groups?

    Answer: Comparative file review

    Comparative file review examines loan files for similarly qualified applicants to identify disparate treatment based on protected class characteristics.

  7. Under the Dodd-Frank Act, which agency has primary rulemaking authority for consumer financial protection regulations affecting large banks?

    Answer: CFPB

    The Consumer Financial Protection Bureau (CFPB) was created by Dodd-Frank and holds primary rulemaking authority for consumer financial protection laws applicable to large banks.