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Regulatory Compliance & Standards Flashcards

7 cards from real CFP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

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  1. Which US regulation requires that financial institutions provide customers with opt-out rights before sharing nonpublic personal information with non-affiliated third parties?

    Answer: Regulation P

    Regulation P implements the GLBA privacy provisions, requiring financial institutions to provide privacy notices and opt-out rights regarding NPI sharing.

  2. A fintech company using AI-based credit scoring must ensure its models comply with fair lending laws. Which test evaluates whether a facially neutral policy disproportionately harms a protected class?

    Answer: Disparate impact analysis

    Disparate impact analysis examines whether a neutral policy or algorithm produces statistically significant adverse effects on protected classes.

  3. Under OFAC regulations, a fintech platform that processes a payment to a Specially Designated National (SDN) must:

    Answer: Block or reject the transaction and report to OFAC

    OFAC requires that transactions involving SDNs be blocked or rejected, and blocked funds must be reported to OFAC within 10 business days.

  4. ISO 20022 is increasingly adopted by fintech payment systems primarily because it:

    Answer: Provides a richer, structured data standard for financial messages

    ISO 20022 offers richer, structured XML-based messaging that enables better data quality, analytics, and interoperability compared to legacy formats like MT messages.

  5. A fintech lending platform using an algorithmic underwriting model must provide which document when taking adverse action against a credit applicant?

    Answer: An adverse action notice listing specific reasons for denial

    ECOA and the Fair Credit Reporting Act require lenders to provide a written adverse action notice with specific reasons for credit denial.

  6. The SEC's Regulation Best Interest (Reg BI) primarily applies to which type of fintech firm?

    Answer: Broker-dealers recommending securities to retail customers

    Reg BI requires broker-dealers to act in the best interest of retail customers when making securities recommendations, applying a higher standard than suitability.

  7. Under the Payment Card Industry Data Security Standard (PCI DSS), tokenization is used primarily to:

    Answer: Replace sensitive card data with a non-sensitive surrogate value

    Tokenization replaces a primary account number (PAN) with a randomly generated token, reducing PCI DSS scope by removing sensitive card data from merchant systems.