CRB Risk Management & Fraud Prevention 4

Question 1

A retail bank discovers that a branch manager has been approving loans for fictitious borrowers and pocketing the proceeds. This is an example of:

Accepted Answer

Internal fraud operational risk

Answer

Loan fraud perpetrated by a bank employee is classified as an internal fraud event under the operational risk category.

Question 2

Which KYC element requires banks to verify that a beneficial owner holds 25% or more equity interest in a legal entity customer?

Accepted Answer

Customer Due Diligence (CDD)

Answer

FinCEN's CDD rule requires banks to identify and verify beneficial owners with 25% or more ownership of legal entity customers as part of due diligence.

Question 3

A bank implements a rule-based transaction monitoring system that alerts on cash deposits over $8,000. A major weakness of this approach is:

Accepted Answer

Criminals can evade detection by keeping transactions just below the threshold

Answer

Static rule-based thresholds are vulnerable to structuring, where criminals deliberately keep transactions below the trigger amount to avoid detection.

Question 4

Under the Electronic Funds Transfer Act, if a customer reports an unauthorized transaction within two business days, their maximum liability is limited to:

Accepted Answer

$50

Answer

Reporting within two business days limits consumer liability to $50 for unauthorized EFT transactions under Regulation E.

Question 5

Which method do criminals most commonly use to launder money through a retail bank in the 'placement' stage?

Accepted Answer

Structuring cash deposits below reporting thresholds

Answer

Placement is the initial stage where illicit cash enters the financial system, most often through structured deposits designed to avoid CTR triggers.

(CRB) Certified Retail Banker Practice Test

(CRB) Certified Retail Banker Practice Test

CRB Risk Management & Fraud Prevention 4