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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. A bank's compliance audit reveals that the overdraft opt-in disclosures for ATM and one-time debit card transactions were not provided before enrollment. Which regulation is violated?

    Answer: Regulation E

    Regulation E (12 CFR Part 1005) requires banks to obtain affirmative opt-in consent using a specific disclosure before charging overdraft fees on ATM and one-time debit card transactions.

  2. Which compliance program element is considered the MOST critical for ensuring a bank's BSA/AML program is effective according to the four pillars?

    Answer: Designation of a BSA Compliance Officer

    Designation of a qualified BSA Compliance Officer is one of the four pillars of an effective BSA/AML program and is essential for program oversight and accountability.

  3. Under the CRA, what rating would a bank receive if its performance substantially exceeds what is needed to meet the convenience and needs of its community?

    Answer: Outstanding

    A CRA rating of 'Outstanding' is awarded to banks that substantially exceed the standard for meeting community credit needs, the highest available rating.

  4. An auditor finds that a bank's flood insurance compliance procedures failed to require flood insurance on a property in a Special Flood Hazard Area (SFHA). Which act is violated?

    Answer: National Flood Insurance Reform Act of 1994

    The National Flood Insurance Reform Act of 1994 mandates that lenders require flood insurance on loans secured by properties located in SFHAs as a condition of the loan.

  5. Which of the following scenarios would most likely trigger an Enhanced Due Diligence (EDD) requirement for a bank customer?

    Answer: A politically exposed person (PEP) opening a private banking account

    Politically exposed persons (PEPs) represent higher money laundering risk due to their public position and influence, triggering EDD requirements under BSA/AML guidance.

  6. During a compliance audit, the auditor notes loan officers are charging higher interest rates to Hispanic applicants with identical credit profiles to non-Hispanic applicants. This is an example of:

    Answer: Disparate treatment discrimination

    Disparate treatment occurs when a lender treats applicants differently based on a protected characteristic (like national origin) even when their credit profiles are identical.

  7. What is the primary purpose of a bank's Compliance Management System (CMS) as assessed by the CFPB?

    Answer: Preventing, identifying, and correcting violations of consumer protection laws

    A CMS is designed to prevent, identify, and correct compliance failures, ensuring the bank consistently meets its obligations under consumer protection laws.