Mixed Deck — All CRCM Topics Flashcards

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?

Answer: Disparate impact

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

A bank's BSA/AML compliance program must be approved and overseen by whom?

Answer: The board of directors or a designated committee

BSA regulations require that the BSA/AML compliance program be approved and overseen by the board of directors or a senior committee.

Which of the following categories of workers needs to get instruction on how to utilize W-9 forms precisely?

Answer: New account officers

W-9 forms are used to collect taxpayer identification information from individuals or entities that may be subject to certain reporting requirements, such as providing payments or income to them. The purpose of the W-9 form is to obtain the recipient's correct taxpayer identification number (TIN) and other relevant information for tax reporting purposes.

Under the CARD Act (Credit CARD Act of 2009), credit card issuers must provide how much advance notice before increasing an interest rate?

Answer: 45 days

The CARD Act requires 45 days advance notice before a credit card issuer can increase an interest rate or make other significant changes.

In IFPUG counting, a Record Element Type (RET) is used to measure complexity of which function type?

Answer: Data Functions (ILFs and EIFs)

RETs are subgroups of logically related data within an ILF or EIF, and they are used along with DETs to determine the complexity of Data Functions.

A contract to ship goods to Country M, a nation that is being boycotted, was signed by PTestGeeks Co. A letter of credit approved by First National Bank will be used for payment. Before being paid, PTestGeeks Co. must attest by the terms of the letter of credit that none of its directors is a citizen of any country that Country M has chosen to boycott. After confirming all the paperwork is in place, First National Bank issues the letter of credit to PTestGeeks. Does First National Bank need to notify the IRS about its involvement in a boycott?

Answer: Yes. The action was participation in a boycott and the bank must report the action to the IRS.

Yes—under U.S. anti-boycott laws, issuing a letter of credit that requires attestation tied to a boycott counts as participation in or support of that boycott, which triggers a mandatory reporting requirement to the IRS. The bank's action is more than ministerial because it knowingly facilitated the boycott condition, so it cannot avoid reporting, and the obligation applies to the bank itself, not only to the exporting company.

Which federal agencies are responsible for conducting CRA examinations?

Answer: The Federal Reserve, OCC, and FDIC

The three primary federal bank regulators — the Federal Reserve (state member banks), OCC (national banks and federal thrifts), and FDIC (state nonmember banks) — each conduct CRA examinations for their supervised institutions.

Under the GLBA, which of the following is considered 'nonpublic personal information' (NPI)?

Answer: Account balances and transaction history provided by the customer

NPI includes any financial information a customer provides to a financial institution, such as account balances and transaction data, that is not publicly available.

Enhanced Due Diligence (EDD) is required for which category of customers?

Answer: High-risk customers such as foreign politically exposed persons

EDD is required for higher-risk customers, including foreign politically exposed persons (PEPs) and high-risk business types.

Which IFPUG principle ensures that counting is independent of the programming language or technology used?

Answer: Technology independence (language-neutral measurement from the user's perspective)

IFPUG FPA measures functionality from the user's perspective, making the count independent of implementation technology or programming language.

Which agency primarily enforces fair lending laws for national banks?

Answer: Office of the Comptroller of the Currency (OCC)

The OCC is the primary federal regulator for national banks and enforces fair lending laws including ECOA and the Fair Housing Act.

The Bank Secrecy Act requires financial institutions to retain records of funds transfers of $3,000 or more (the 'Travel Rule'). What information must 'travel' with the payment order?

Answer: Originator's name, address, and account number plus beneficiary's name and account number

The Travel Rule requires that specific originator and beneficiary identifying information accompany funds transfers of $3,000 or more to help law enforcement trace illicit funds.

Under IFPUG's Counting Practices Manual, which component is classified as a Data Function rather than a Transaction Function?

Answer: Internal Logical File (ILF)

Internal Logical Files are Data Functions because they represent user-identifiable groups of logically related data maintained within the application boundary.

A principal in municipal securities must directly supervise municipal securities activities. This entails going through all but one of the items below. What activity DOES NOT directly entail the direct supervision of municipal securities operations?

Answer: Providing quotations to customers

Providing quotations to customers is a customer-facing sales activity, not a supervisory function, so it is not part of directly supervising municipal securities operations. Opening accounts, handling customer complaints, and overseeing transactions are oversight and compliance duties that a principal must directly supervise.

What does the Community Reinvestment Act (CRA) require of depository institutions?

Answer: They must meet the credit needs of their entire community, including low- and moderate-income areas

The CRA requires banks to meet the credit needs of all areas in their assessment area, including LMI communities, consistent with safe and sound operations.

Under the Servicemembers Civil Relief Act (SCRA), what is the interest rate cap applied to pre-service debts of active-duty servicemembers?

Answer: 6%

The SCRA caps interest rates on debts incurred before active military service at 6% per year for the duration of the active-duty period.

The Right to Financial Privacy Act (RFPA) restricts federal government agencies from obtaining customer financial records without:

Answer: Customer notice or legal process such as a subpoena

The RFPA requires federal government agencies to either notify the customer or use legal process (e.g., subpoena, court order) before obtaining financial records.

The CRA lending test for large banks primarily evaluates:

Answer: Geographic distribution and borrower characteristics of home mortgage, small business, small farm, and community development loans

The lending test evaluates the full range of a large bank's home mortgage, small business, small farm, and community development lending, examining geographic distribution and the income levels of borrowers served.

A compliance officer at a credit union is reviewing a member's loan file and finds no documentation of income verification. This most likely violates which regulatory requirement?

Answer: Ability-to-Repay (ATR) rule under Regulation Z

The ATR rule requires lenders to make a reasonable, good-faith determination of the consumer's ability to repay based on verified income and other financial information.

The Home Equity Loan Consumer Protection Act requires lenders to provide disclosures for HELOCs at least how many days before account opening?

Answer: 3 days

Lenders must provide HELOC disclosures at least 3 business days before account opening so consumers can shop and compare.