CRCM Certified Regulatory Compliance Manager MCQ — Questions and Answers
Question 1: Under the Bank Secrecy Act (BSA), what is the threshold amount that triggers a Currency Transaction Report (CTR)?
- $5,000
- $10,000 (Correct answer)
- $25,000
- $50,000
Correct answer: $10,000
The BSA requires financial institutions to file a CTR for any currency transaction exceeding $10,000 in a single business day.
Question 2: Which federal agency is primarily responsible for enforcing the Equal Credit Opportunity Act (ECOA)?
- Federal Reserve Board
- Consumer Financial Protection Bureau (CFPB) (Correct answer)
- Office of the Comptroller of the Currency (OCC)
- Federal Deposit Insurance Corporation (FDIC)
Correct answer: Consumer Financial Protection Bureau (CFPB)
The CFPB has primary enforcement authority over ECOA for most financial institutions, prohibiting credit discrimination.
Question 3: A bank's compliance officer discovers that the institution's loan officers have been steering minority applicants toward higher-cost loan products. This practice is best described as:
- Red-lining
- Reverse red-lining
- Disparate treatment (Correct answer)
- Disparate impact
Correct answer: Disparate treatment
Steering minority applicants to inferior products based on their protected class characteristic is disparate treatment—intentional discriminatory action.
Question 4: Under the Community Reinvestment Act (CRA), which examination component evaluates a bank's record of making loans in its assessment area?
- Investment test
- Service test
- Lending test (Correct answer)
- Community development test
Correct answer: Lending test
The lending test is the most heavily weighted CRA component and evaluates the number and dollar amount of loans made within the assessment area.
Question 5: The Gramm-Leach-Bliley Act (GLBA) requires financial institutions to provide customers with a privacy notice:
- Only when the customer requests one
- At account opening and annually thereafter (Correct answer)
- Every two years
- Only when sharing data with unaffiliated third parties
Correct answer: At account opening and annually thereafter
GLBA requires an initial privacy notice at account opening and annual notices to all existing customers describing information-sharing practices.
Question 6: Which regulation implements the Truth in Savings Act (TISA) and governs disclosure requirements for deposit accounts?
- Regulation B
- Regulation DD (Correct answer)
- Regulation E
- Regulation Z
Correct answer: Regulation DD
Regulation DD implements TISA and requires depository institutions to disclose terms and conditions of deposit accounts, including APY.
Question 7: A Suspicious Activity Report (SAR) must be filed within how many calendar days of the initial detection of facts that may constitute a violation?
- 15 days
- 30 days (Correct answer)
- 45 days
- 60 days
Correct answer: 30 days
Financial institutions must file a SAR within 30 calendar days of initial detection, or 60 days if no suspect is identified.
Question 8: Under the Children's Online Privacy Protection Act (COPPA), websites directed at children under what age must obtain verifiable parental consent before collecting personal information?
- 13 (Correct answer)
- 16
- 18
- 21
Correct answer: 13
COPPA requires operators of websites directed to children under 13 to obtain verifiable parental consent before collecting personal information from those children.
Question 9: When a consumer disputes the accuracy of information in their credit report under the Fair Credit Reporting Act (FCRA), the credit reporting agency (CRA) must complete its investigation within:
- 15 business days
- 30 days (with a possible 15-day extension) (Correct answer)
- 45 days
- 60 days
Correct answer: 30 days (with a possible 15-day extension)
The FCRA requires CRAs to investigate disputes within 30 days, extendable to 45 days if the consumer provides additional relevant information during the investigation.
Question 10: Which of the following actions would constitute a violation of the Unfair, Deceptive, or Abusive Acts or Practices (UDAAP) standard under Dodd-Frank?
- Charging a disclosed overdraft fee
- Misrepresenting the cost of add-on products to obtain consumer consent (Correct answer)
- Declining to approve a high-risk loan application
- Requiring documentation before extending credit
Correct answer: Misrepresenting the cost of add-on products to obtain consumer consent
Misrepresenting the cost or terms of add-on products to manipulate consumer decision-making is a deceptive act or practice prohibited by UDAAP.
Question 11: A customer opens a new account and provides identification. Under the Customer Identification Program (CIP) rules, the bank must verify the customer's identity:
- Within 30 days of account opening
- Before the account is opened
- Within a reasonable time before or after account opening (Correct answer)
- Only if the transaction exceeds $10,000
Correct answer: Within a reasonable time before or after account opening
CIP rules require identity verification within a reasonable time before or after account opening, allowing flexibility for low-risk situations while ensuring due diligence.
Question 12: The Dodd-Frank Wall Street Reform and Consumer Protection Act created the CFPB and granted it authority over:
- Only banks with assets over $10 billion
- All financial institutions regardless of size
- Nonbank financial companies offering consumer financial products or services, and large banks (Correct answer)
- Only federally chartered institutions
Correct answer: Nonbank financial companies offering consumer financial products or services, and large banks
The CFPB has supervisory authority over nonbank financial companies and depository institutions with over $10 billion in assets, while smaller banks are supervised by their prudential regulators.
Question 13: In a compliance risk assessment, 'inherent risk' is best defined as:
- The risk remaining after controls are applied
- The level of risk present before any mitigating controls are considered (Correct answer)
- Risk identified during a regulatory examination
- The risk associated with third-party vendors only
Correct answer: The level of risk present before any mitigating controls are considered
Inherent risk is the gross or raw level of risk that exists in a process or product before any controls, policies, or mitigating factors are taken into account.
Question 14: Under the Home Ownership and Equity Protection Act (HOEPA), a loan is classified as a 'high-cost mortgage' if it exceeds certain rate or fee thresholds. Which of the following is a consequence of HOEPA coverage?
- The loan becomes automatically void
- Additional disclosures and restrictions on loan terms are required (Correct answer)
- The borrower receives an automatic rate reduction
- The lender must file a special report with HUD
Correct answer: Additional disclosures and restrictions on loan terms are required
HOEPA-covered high-cost mortgages trigger mandatory additional disclosures, restrictions on certain loan terms (e.g., balloon payments, prepayment penalties), and enhanced borrower protections.
