Certified Regulatory Compliance Manager (CRCM) — Questions and Answers

Question 1: Which of the following BEST qualifies as a community development service under CRA?

Providing free financial literacy workshops to low- and moderate-income individuals (Correct answer)
Offering premium interest rates to attract high-net-worth depositors
Installing ATMs exclusively in high-income shopping districts
Developing mobile banking features targeted at business customers

Correct answer: Providing free financial literacy workshops to low- and moderate-income individuals

Financial literacy education and counseling services targeted to LMI individuals qualify as community development services under CRA.

Question 2: A compliance officer conducting a Fair Lending review finds that the bank's pricing model results in higher rates for a protected class even though lending policies appear neutral on their face. This best describes which legal theory?

Disparate treatment
Predatory lending
Disparate impact (Correct answer)
Redlining

Correct answer: Disparate impact

Disparate impact occurs when a facially neutral policy or practice disproportionately harms a protected class without business justification.

Question 3: In the context of IFPUG and regulatory compliance, how does function point sizing help a compliance manager evaluate outsourced software development contracts?

It replaces the need for a statement of work in vendor contracts
It measures vendor adherence to data privacy regulations
It provides a technology-neutral unit for defining deliverable scope and verifying what was actually built (Correct answer)
It automatically generates compliance reports for regulatory review

Correct answer: It provides a technology-neutral unit for defining deliverable scope and verifying what was actually built

Function points offer a consistent, language-independent size metric that can be used to specify contractual scope and objectively verify delivery.

Question 4: The Fair Debt Collection Practices Act (FDCPA) restricts debt collectors from contacting consumers:

More than once per week for each debt
Before 8 a.m. or after 9 p.m. local time (Correct answer)
At any time if the consumer has an outstanding balance
During business hours without a court order

Correct answer: Before 8 a.m. or after 9 p.m. local time

The FDCPA prohibits debt collectors from contacting consumers before 8 a.m. or after 9 p.m. in the consumer's local time zone.

Question 5: Regulation Z implements which federal consumer protection law?

Electronic Fund Transfer Act
Fair Credit Reporting Act
Fair Debt Collection Practices Act
Truth in Lending Act (Correct answer)

Correct answer: Truth in Lending Act

Regulation Z is the Federal Reserve's (and now CFPB's) implementing regulation for the Truth in Lending Act.

Question 6: Congress limited financial organizations' ability to share consumer information with other parties. By the law, financial institutions must also provide disclosures when starting a client relationship and then once a year after that.

Gramm-Leach Act of 2000
Gramm-Leach-Billey Act of 2001
Gramm-Billey Act of 1998
Gramm-Leach -Billey Act of 1999 (Correct answer)

Correct answer: Gramm-Leach -Billey Act of 1999

The correct answer is the Gramm-Leach-Bliley Act of 1999. Congress enacted the Gramm-Leach-Bliley Act (GLBA) in 1999 to address various aspects of the financial services industry, including the disclosure of customer information by financial institutions.

Question 7: Under RESPA's Section 10, the maximum amount a servicer may require a borrower to maintain in an escrow account for taxes and insurance is capped at:

Two months of estimated payments plus a cushion (Correct answer)
One month of estimated payments
Six months of estimated payments
Three months of estimated payments

Correct answer: Two months of estimated payments plus a cushion

RESPA Section 10 limits escrow cushions to no more than one-sixth of total annual disbursements (equivalent to two months of payments).

Question 8: Under the Fair Housing Act, which of the following is NOT a protected class?

National origin
Income level (Correct answer)
Race
Familial status

Correct answer: Income level

Income level is not a protected class under the Fair Housing Act; the protected classes are race, color, religion, national origin, sex, disability, and familial status.

Question 9: Which of the following is an example of 'disparate treatment' in lending?

A policy requiring 20% down payment for all borrowers
Requiring income verification for all mortgage applicants
A standard credit score cutoff applied to all applicants
Charging minority applicants higher rates than similarly qualified non-minority applicants (Correct answer)

Correct answer: Charging minority applicants higher rates than similarly qualified non-minority applicants

Disparate treatment involves treating similarly situated applicants differently based on a protected characteristic, such as charging higher rates to minorities.

Question 10: Regulation E requires that periodic statements for accounts with electronic fund transfer capability be provided:

Quarterly
Monthly if there is an electronic transfer during the cycle (Correct answer)
Annually for inactive accounts
Only on customer request

Correct answer: Monthly if there is an electronic transfer during the cycle

Regulation E requires monthly periodic statements for accounts that had an EFT during the statement period.

Question 11: The Military Lending Act (MLA) caps the Military Annual Percentage Rate (MAPR) for most consumer credit products at:

28%
50%
18%
36% (Correct answer)

Correct answer: 36%

The MLA imposes a 36% MAPR cap on most consumer credit extended to covered servicemembers and their dependents.

Question 12: What is the primary purpose of the Community Reinvestment Act (CRA)?

To mandate that banks offer accounts to all applicants regardless of creditworthiness
To require banks to report loan data by race and gender
To encourage banks to help meet the credit needs of the entire community, including low- and moderate-income areas (Correct answer)
To establish minimum capital requirements for banks operating in underserved communities

Correct answer: To encourage banks to help meet the credit needs of the entire community, including low- and moderate-income areas

The CRA was enacted to encourage depository institutions to meet the credit needs of all segments of their communities, with particular emphasis on low- and moderate-income neighborhoods.

Question 13: According to IFPUG, what is the unadjusted function point (UFP) value for a low-complexity Internal Logical File?

15
7 (Correct answer)
10
5

Correct answer: 7

A low-complexity ILF is assigned 7 unadjusted function points according to the IFPUG Counting Practices Manual.

Question 14: Under the CRA, which rating reflects a bank that has substantially helped meet community credit needs and may have outstanding programs?

Outstanding (Correct answer)
Substantial Noncompliance
Needs to Improve
Satisfactory

Correct answer: Outstanding

Outstanding is the highest CRA rating, awarded when an institution substantially exceeds expectations in helping meet the credit needs of its assessment area.

Question 15: 'Redlining,' as addressed by the CRA, refers to:

Setting interest rates higher for loans in certain zip codes due to lower property values
Marking loan files with color codes to indicate risk levels for internal tracking
Refusing or significantly limiting financial services in geographic areas based on the race or ethnicity of residents (Correct answer)
Targeting LMI areas with non-traditional or high-cost loan products

Correct answer: Refusing or significantly limiting financial services in geographic areas based on the race or ethnicity of residents

Redlining is the discriminatory practice of denying or limiting banking services in specific geographic areas based on the racial or ethnic composition of those communities, and is a central concern the CRA was designed to address.

Question 16: A bank's fair lending self-assessment program should include:

Comparison of loan denial rates only across branches
Annual review of the bank's marketing materials only
Customer satisfaction surveys as the primary compliance metric
Statistical analysis of lending data to detect potential disparities by protected class (Correct answer)

Correct answer: Statistical analysis of lending data to detect potential disparities by protected class

Effective fair lending self-assessment includes statistical analysis of lending decisions, pricing, and terms to identify potential disparities by protected class.

Question 17: Which FinCEN rule requires covered financial institutions to identify and verify the identity of the beneficial owners of legal entity customers?

Enhanced Due Diligence (EDD) Rule
Know Your Customer (KYC) Rule
Anti-Money Laundering (AML) Rule
Customer Due Diligence (CDD) Rule (Correct answer)

Correct answer: Customer Due Diligence (CDD) Rule

FinCEN's Customer Due Diligence Rule, effective May 2018, requires financial institutions to identify beneficial owners with 25% or more ownership and one control person for legal entities.

Question 18: Under the Real Estate Settlement Procedures Act (RESPA), a kickback paid for the referral of settlement service business is:

Permissible if disclosed on the Closing Disclosure
Prohibited (Correct answer)
Required to be disclosed to the state regulator only
Allowed if under $500

Correct answer: Prohibited

RESPA Section 8 prohibits kickbacks and unearned fees in connection with federally related mortgage transactions.

Question 19: What is the minimum retention period for BSA-related records such as CTRs and SARs?

3 years
7 years
2 years
5 years (Correct answer)

Correct answer: 5 years

BSA requires financial institutions to retain most BSA records for a minimum of five years.

Question 20: A bank's compliance officer discovers that the institution's loan officers have been steering minority applicants toward higher-cost loan products. This practice is best described as:

Red-lining
Disparate treatment (Correct answer)
Reverse red-lining
Disparate impact

Correct answer: Disparate treatment

Steering minority applicants to inferior products based on their protected class characteristic is disparate treatment—intentional discriminatory action.

Question 21: Which metric is commonly used to identify potential redlining in a fair lending examination?

Average loan-to-value ratios by branch
Net interest margin by product type
Application and origination rates in majority-minority census tracts vs. peer lenders (Correct answer)
Employee compliance training completion rates

Correct answer: Application and origination rates in majority-minority census tracts vs. peer lenders

Examiners compare application and origination rates in majority-minority census tracts to peer lenders operating in the same market to detect potential redlining.

Question 22: The Telephone Consumer Protection Act (TCPA) requires businesses to obtain prior express written consent before:

Calling a consumer's home landline during business hours
Emailing product offers to existing customers
Mailing promotional materials to a consumer's address
Sending marketing text messages or robocalls to a consumer's cell phone (Correct answer)

Correct answer: Sending marketing text messages or robocalls to a consumer's cell phone

The TCPA requires prior express written consent before sending marketing text messages or making robocalls to consumers' cell phones.

Question 23: Which of the following will boost a cash transaction-based anti-money laundering program the MOST?

Review all deposits of $25,000 or more
Complete SAR worksheets on all cash transactions of $5,000 or more
Monitor cash transactions of less than $10,000 for suspicious patterns (Correct answer)
Complete CTR worksheets on all cash transactions of $5,000 or more

Correct answer: Monitor cash transactions of less than $10,000 for suspicious patterns

Monitoring cash transactions of less than $10,000 for suspicious patterns is the most effective measure in strengthening an anti-money laundering program involving cash transactions.

Question 24: A compliance manager is comparing two software releases using IFPUG metrics. Release A delivered 300 UFPs in 6 months; Release B delivered 450 UFPs in 8 months. Which release had higher productivity?

Release B, because it delivered more total function points
They are equal because both teams worked the same technology stack (Correct answer)
Release A, because it was completed in fewer months
Release A, at 50 UFP/month versus Release B at approximately 56 UFP/month — Release B is actually higher

Correct answer: They are equal because both teams worked the same technology stack

Release A = 50 UFP/month and Release B ≈ 56.25 UFP/month, so Release B had higher productivity per month despite taking longer.

Question 25: What is 'redlining' in fair lending?

Charging higher interest rates to low-income borrowers
Requiring cosigners based on the applicant's age
Refusing to lend or imposing unfavorable terms in minority neighborhoods (Correct answer)
Offering credit only through preferred brokers

Correct answer: Refusing to lend or imposing unfavorable terms in minority neighborhoods

Redlining is the illegal practice of denying credit or imposing worse terms based on the racial or ethnic composition of a neighborhood.

Question 26: A bank's BSA/AML compliance program must include which four pillars as required by federal regulation?

Policies, procedures, training, and audit
Board oversight, risk assessment, monitoring, and reporting
Internal controls, independent testing, designated BSA officer, and customer due diligence (Correct answer)
Customer identification, due diligence, enhanced due diligence, and SAR filing

Correct answer: Internal controls, independent testing, designated BSA officer, and customer due diligence

The four required BSA/AML program pillars are internal controls, independent testing (audit), a designated BSA compliance officer, and training.

Question 27: What is the primary purpose of a 'correspondent banking' due diligence program under BSA?

To verify domestic retail customers' identities
To assess the AML risks of foreign financial institutions using the bank's services (Correct answer)
To screen mortgage applicants
To monitor employee personal accounts

Correct answer: To assess the AML risks of foreign financial institutions using the bank's services

Correspondent banking due diligence assesses the AML controls and risk profile of foreign banks that access U.S. financial services.

Question 28: Which IFPUG concept most closely aligns with a compliance manager's concern about measuring the true business value delivered by a software project?

Technical complexity adjustments based on system architecture
Defect density as a measure of software quality
Lines of code as a proxy for development investment
Functional size, which measures user-visible functionality independent of implementation (Correct answer)

Correct answer: Functional size, which measures user-visible functionality independent of implementation

Functional size captures the amount of business functionality delivered to users, making it the most business-relevant IFPUG measure for compliance managers.

Question 29: 'Disparate impact' in fair lending refers to:

A lender who openly states discriminatory policies
A neutral lending policy that disproportionately harms a protected class (Correct answer)
Charging different rates to different bank branches
A borrower who disputes a loan denial

Correct answer: A neutral lending policy that disproportionately harms a protected class

Disparate impact occurs when a facially neutral policy has a disproportionate adverse effect on a protected class without business justification.

Question 30: Under the USA PATRIOT Act, banks must implement a Customer Identification Program (CIP) verifying identity for which customers?

Only non-US citizens
Only accounts with balances over $50,000
All new account holders (Correct answer)
Only commercial business accounts

Correct answer: All new account holders

CIP requirements apply to all new account holders regardless of account type or balance.

Certified Regulatory Compliance Manager (CRCM)

The CRCM, administered by the American Bankers Association (ABA), validates expertise in bank regulatory compliance across consumer protection regulations, foundational banking rules, and compliance management systems. It is the premier compliance certification for banking professionals.

Questions

36 min

Time Limit

70%

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