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Regulatory Compliance & Ethical Standards Flashcards

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  1. Under USA PATRIOT Act Section 312, a 'private banking account' for a non-U.S. person that triggers enhanced due diligence requires a minimum aggregate deposit of:

    Answer: $1,000,000

    Section 312 defines a private banking account as one requiring at least $1,000,000 in aggregate deposits for a non-U.S. person, assigned to a bank liaison.

  2. Under the Section 312 enhanced due diligence program for private banking, a bank must take reasonable steps to determine which of the following about the account?

    Answer: The source of funds deposited

    Section 312 requires steps to find the identity of nominal and beneficial owners, the source of funds, and whether the client is a senior foreign political figure.

  3. A private banker learns that a long-time client has become the subject of a SAR filed by the bank. The client asks whether the bank has reported him. What should the banker do?

    Answer: Not disclose the SAR or any information that would reveal its existence

    Federal law prohibits disclosing a SAR or any information that would reveal its existence (no tipping off).

  4. When no suspect has been identified, a bank may delay filing a SAR to find a suspect, but filing may not exceed how many calendar days after initial detection?

    Answer: 60 days

    The normal 30-day deadline can be extended by 30 days to find a suspect, with a 60-day maximum.

  5. Under the FinCEN CDD Rule, the ownership prong requires identifying each individual who owns, directly or indirectly, what share of a legal entity customer's equity interests?

    Answer: 25% or more

    The ownership prong covers each individual holding 25% or more, plus one individual with significant control.

  6. A trust company acting as trustee must invest trust assets under the Uniform Prudent Investor Act. Which principle is central to that standard?

    Answer: Investments are judged in the context of the whole portfolio and overall strategy

    The UPIA applies modern portfolio theory, judging each investment as part of the whole portfolio rather than on its own.

  7. A client splits $28,000 in cash into three deposits of under $10,000 at different branches on the same day to avoid a CTR. This conduct is best described as:

    Answer: Structuring

    Breaking up cash transactions to evade CTR reporting is structuring, a federal crime under 31 U.S.C. 5324.

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