CBP Cheat Sheet 2026

The 30 highest-yield CBP facts, distilled from real exam questions. Print it, save it as a PDF, or study it here — free, no sign-up.

1. What is the primary purpose of a Credit Valuation Adjustment (CVA)? → To account for the risk that a counterparty to a derivative may default before settlement
2. When a bank assigns an internal credit rating to a borrower, what is the primary purpose? → To estimate the probability of default and set loan pricing and reserves
3. Under the standardized approach to credit risk in Basel III, which asset class typically receives a 0% risk weight? → Claims on OECD sovereign governments in domestic currency
4. A bank wishes to open a new account for a high-risk customer. Which enhanced AML measure is most appropriate? → Enhanced due diligence (EDD)
5. A 'cross-default' clause in a loan agreement means: → Default on one debt obligation triggers default on the loan containing the clause
6. Which inter-governmental body sets the global standards for combating money laundering and terrorist financing, famously known for its "40 Recommendations"? → The Financial Action Task Force (FATF)
7. A bank is required to file a Currency Transaction Report (CTR) when a customer conducts a cash transaction in excess of: → $10,000
8. When a bank 'charges off' a loan, it means the bank: → Removes the loan from its books as an asset and records it as a loss
9. What is 'card-not-present' (CNP) fraud in digital banking? → Unauthorized transactions made online or by phone without the physical card
10. Which market serves as a primary venue for banks to issue and trade short-term debt instruments with maturities of one year or less? → Money market
11. Which ethical principle requires that bankers provide customers with clear, accurate, and complete information about products and fees? → Transparency
12. An ethical banking culture that encourages employees to raise concerns without fear of retaliation is characterized by: → A strong 'speak up' or whistleblower protection culture
13. Which component of Basel III was specifically introduced to address systemic risk during periods of economic stress? → Countercyclical capital buffer
14. The Office of Foreign Assets Control (OFAC) maintains sanctions lists. When a bank's screening system generates a potential match, the bank must: → Block or reject the transaction and file a report with OFAC if a true match is confirmed
15. A financial covenant in a corporate loan agreement typically requires the borrower to: → Maintain certain financial ratios such as a minimum debt service coverage ratio
16. The Fair Debt Collection Practices Act (FDCPA) primarily regulates: → Third-party debt collectors pursuing consumer debts on behalf of creditors
17. What type of risk arises from failures in internal processes or systems? → Operational risk
18. A bank processes an ACH debit entry that the originating company sent in error. The customer's right to return the transaction as 'unauthorized' expires after: → 60 calendar days
19. Which type of retail deposit account allows customers to deposit funds at any time but restricts withdrawals to a fixed future date? → Certificate of deposit (CD)
20. What is the primary purpose of a 'will' in estate planning services offered by banks? → To legally specify how a person's assets should be distributed after death
21. Why is credit scoring important in financial institutions? → To assess borrower risk efficiently
22. Which of the following is an example of off-balance-sheet activity for a bank? → Issuing a standby letter of credit
23. Which banking operations concept describes the practice of netting offsetting payment obligations between two banks before settling only the difference? → Bilateral netting
24. Which stress testing approach applies historical market scenarios (e.g., the 2008 financial crisis) directly to the current portfolio? → Historical simulation
25. What does the term 'fractional reserve banking' mean? → Banks keep only a fraction of deposits in reserve and lend out the rest
26. What is 'transfer pricing' in the context of international banking? → The internal rate charged between subsidiaries within a multinational banking group
27. Which type of account typically offers the highest interest rate? → Certificate of Deposit (CD)
28. Asset-based lending (ABL) determines loan availability primarily based on: → The liquidation value of eligible collateral assets such as receivables and inventory
29. What is the primary purpose of a bank's Internal Capital Adequacy Assessment Process (ICAAP)? → To ensure the bank holds capital commensurate with its full risk profile
30. Which regulation is designed to combat money laundering activities? → Anti-Money Laundering (AML)