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Regulatory Compliance & Ethical Standards Flashcards

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

Read the first 7 Regulatory Compliance & Ethical Standards flashcards as text

  1. The concept of 'regulatory capital arbitrage' refers to:

    Answer: Using regulatory differences across jurisdictions to reduce required capital below the spirit of the rules

    Regulatory capital arbitrage involves structuring transactions or operations to minimize required capital while circumventing the intent of capital adequacy regulations.

  2. Under the Americans with Disabilities Act (ADA), which standard governs web accessibility for financial institutions?

    Answer: WCAG 2.1 AA (Web Content Accessibility Guidelines)

    Courts and the DOJ have consistently applied WCAG 2.1 Level AA as the standard for ADA-compliant web accessibility for financial services websites.

  3. A Certified Risk Architect who discovers a material misstatement in a risk report they previously certified has an ethical obligation to:

    Answer: Promptly notify appropriate parties and issue a corrected report

    Professional ethics require prompt notification and correction of material misstatements in certified reports, regardless of reputational inconvenience.

  4. The 'four-eyes principle' in compliance and risk governance requires that:

    Answer: Significant decisions or transactions require approval by at least two authorized individuals

    The four-eyes principle mandates that consequential actions require review and approval by a second authorized person to prevent errors and fraud.

  5. The OCC's 'heightened standards' guidance (12 CFR Part 30, Appendix D) applies to national banks and federal savings associations with assets exceeding:

    Answer: $100 billion

    OCC's heightened standards for risk governance apply to covered institutions with average total consolidated assets of $50 billion or more—though often cited as $50B, the OCC's own threshold is $50B for initial applicability.

  6. Under FINRA Rule 3110, broker-dealers are required to establish a supervisory system that includes:

    Answer: Written supervisory procedures reasonably designed to ensure compliance with applicable rules

    FINRA Rule 3110 requires broker-dealers to maintain written supervisory procedures (WSPs) reasonably designed to achieve compliance with securities laws and FINRA rules.

  7. An institution's compliance culture is BEST assessed through which combination of indicators?

    Answer: Employee conduct data, training completion rates, escalation patterns, and regulatory examination findings

    Compliance culture is a behavioral phenomenon best measured through conduct metrics, training engagement, willingness to escalate issues, and regulatory feedback.