CRCM Trivia 4 — Questions and Answers
Question 1: Under the Truth in Savings Act, what term describes the percentage rate reflecting the total amount of interest paid on an account based on the annual percentage rate and frequency of compounding?
- Annual Percentage Rate (APR)
- Annual Percentage Yield (APY) (Correct answer)
- Effective Annual Rate (EAR)
- Nominal Interest Rate (NIR)
Correct answer: Annual Percentage Yield (APY)
The Annual Percentage Yield (APY) reflects the total interest earned on a deposit account in one year, taking compounding frequency into account, as required by Regulation DD.
Question 2: Which federal law requires financial institutions to establish a Customer Identification Program (CIP) as part of their BSA compliance?
- Dodd-Frank Wall Street Reform Act
- USA PATRIOT Act of 2001 (Correct answer)
- Bank Holding Company Act
- Financial Modernization Act
Correct answer: USA PATRIOT Act of 2001
The USA PATRIOT Act of 2001 required financial institutions to implement CIP procedures to verify the identity of customers opening new accounts.
Question 3: Under the Fair Debt Collection Practices Act (FDCPA), what is the maximum number of times a debt collector may call a consumer at their workplace if told calls are unwelcome?
- Once more after being told
- None — calls must cease immediately (Correct answer)
- No more than three times per week
- No more than once per day
Correct answer: None — calls must cease immediately
Under the FDCPA, once a consumer tells a debt collector they cannot receive calls at work, the collector must cease all future workplace calls.
Question 4: What is the term for the compliance risk management framework that includes policies, procedures, training, monitoring, and corrective action?
- Enterprise Risk Management System
- Compliance Management System (CMS) (Correct answer)
- Internal Control Framework
- Three Lines of Defense Model
Correct answer: Compliance Management System (CMS)
A Compliance Management System (CMS) is the formal framework regulators expect financial institutions to use to manage compliance risk across all business lines.
Question 5: Which regulation implements the Home Ownership and Equity Protection Act (HOEPA) for high-cost mortgages?
- Regulation B
- Regulation C
- Regulation X
- Regulation Z (Correct answer)
Correct answer: Regulation Z
Regulation Z implements both TILA and HOEPA, establishing special disclosures and restrictions for high-cost mortgage loans that exceed certain APR and fee thresholds.
Question 6: Under the CRA, which rating reflects a bank that has substantially helped meet community credit needs and may have outstanding programs?
- Satisfactory
- Needs to Improve
- Outstanding (Correct answer)
- Substantial Noncompliance
Correct answer: Outstanding
Outstanding is the highest CRA rating, awarded when an institution substantially exceeds expectations in helping meet the credit needs of its assessment area.
Question 7: Which type of fair lending discrimination occurs when a lender applies credit standards inconsistently based on a prohibited basis such as race or gender?
- Disparate impact
- Disparate treatment (Correct answer)
- Redlining
- Steering
Correct answer: Disparate treatment
Disparate treatment occurs when a lender intentionally treats applicants differently based on a prohibited characteristic, even without explicit discriminatory policy.
CRCM Trivia 4
Under the Truth in Savings Act, what term describes the percentage rate reflecting the total amount of interest paid on an account based on the annual percentage rate and frequency of compounding?