International Banking Practices Flashcards
7 cards from real CBP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 International Banking Practices flashcards as text
Which incoterm places maximum responsibility on the seller for delivery costs and risks all the way to the buyer's named destination?
Answer: DDP (Delivered Duty Paid)
Under DDP, the seller bears all costs and risks including import duties and taxes until the goods are delivered at the buyer's named place.
A syndicated loan facility in which one bank originates the loan and then sells participations to other banks is known as:
Answer: A lead-managed syndication
In a lead-managed syndication, the arranging bank underwrites and then distributes portions of the credit to other lenders in the secondary market.
Under the FATF Recommendations, what is the minimum period a financial institution must retain customer due diligence records after a business relationship ends?
Answer: Five years
FATF Recommendation 11 requires that financial institutions retain CDD records and transaction records for at least five years after the end of the business relationship.
A US bank's international branch is subject to host-country regulations PRIMARILY because:
Answer: Host-country regulators have supervisory authority over operations within their jurisdiction
Even though a branch is part of the parent bank, host-country regulators assert supervisory authority over all banking activity conducted within their territory.
Which instrument allows an exporter to receive immediate payment from its bank by discounting a time draft accepted by the importer's bank, with no recourse to the exporter?
Answer: Forfaiting
Forfaiting involves the purchase of medium-term trade receivables (usually guaranteed by bank avals or LCs) at a discount on a non-recourse basis.
The Wolfsberg Group's Correspondent Banking Due Diligence Questionnaire (CBDDQ) is primarily used to:
Answer: Standardize AML/KYC information sharing between correspondent banks
The CBDDQ provides a standardized framework for banks to exchange due diligence information when establishing or maintaining correspondent banking relationships.
In international trade finance, a 'red clause' letter of credit differs from a standard LC because it:
Answer: Allows the beneficiary to draw pre-shipment advances
A red clause LC includes a clause (traditionally written in red ink) authorizing the negotiating bank to advance funds to the beneficiary before documents are presented.