CRB Financial Regulations & Compliance 3 — Questions and Answers
Question 1: The Community Reinvestment Act (CRA) was enacted to address which problem?
- Excessive bank fees in low-income areas
- Redlining and discriminatory lending in underserved communities (Correct answer)
- Lack of ATMs in rural areas
- High interest rates on consumer loans
Correct answer: Redlining and discriminatory lending in underserved communities
The CRA was enacted in 1977 to combat redlining and encourage banks to meet the credit needs of all communities, including low- and moderate-income areas.
Question 2: Under the Equal Credit Opportunity Act (ECOA), which of the following is a prohibited basis for credit decisions?
- Credit score
- Debt-to-income ratio
- Marital status (Correct answer)
- Employment history
Correct answer: Marital status
ECOA prohibits credit discrimination based on race, color, religion, national origin, sex, marital status, age, or receipt of public assistance.
Question 3: What is 'beneficial ownership' information required under FinCEN's Customer Due Diligence rule?
- The bank's profit margin on each account
- Identification of individuals who own 25% or more of a legal entity customer (Correct answer)
- A list of all authorized signers on a business account
- Documentation of the business's annual revenue
Correct answer: Identification of individuals who own 25% or more of a legal entity customer
FinCEN's CDD rule requires banks to identify and verify the identity of individuals who own 25% or more of a legal entity opening an account.
Question 4: Which regulation governs the timely availability of funds deposited into transaction accounts?
- Regulation D
- Regulation CC (Correct answer)
- Regulation E
- Regulation B
Correct answer: Regulation CC
Regulation CC implements the Expedited Funds Availability Act, setting maximum hold periods that banks may place on deposited checks.
Question 5: A bank officer approves a loan to a family member without disclosing the relationship. This best describes which compliance concern?
- Money laundering
- Insider trading
- Conflict of interest (Correct answer)
- Unauthorized disclosure
Correct answer: Conflict of interest
Approving credit for related parties without disclosure is a classic conflict of interest that violates most banks' ethics policies and regulatory expectations.
Question 6: Under the Fair Debt Collection Practices Act (FDCPA), which practice is prohibited?
- Contacting a debtor by mail
- Calling a debtor at 9:00 AM on a weekday
- Threatening legal action the collector has no intention of taking (Correct answer)
- Identifying oneself as a debt collector
Correct answer: Threatening legal action the collector has no intention of taking
The FDCPA prohibits debt collectors from making false, deceptive, or misleading representations, including threats of legal action they do not intend to take.
Question 7: What is the primary purpose of a Suspicious Activity Report (SAR)?
- To report customer complaints to the CFPB
- To alert law enforcement to potential financial crimes (Correct answer)
- To document routine large cash transactions
- To notify the IRS of taxable income
Correct answer: To alert law enforcement to potential financial crimes
SARs are filed with FinCEN to alert law enforcement agencies to transactions that may involve money laundering, fraud, or other financial crimes.
CRB Financial Regulations & Compliance 3
The Community Reinvestment Act (CRA) was enacted to address which problem?