CRCM Trivia 5 — Questions and Answers
Question 1: What is the maximum amount the FDIC insures per depositor, per insured bank, for each account ownership category?
- $100,000
- $150,000
- $250,000 (Correct answer)
- $500,000
Correct answer: $250,000
The FDIC insures deposits up to $250,000 per depositor, per insured institution, for each account ownership category, a limit permanently increased by the Dodd-Frank Act.
Question 2: Under RESPA, which practice is strictly prohibited where a settlement service provider receives anything of value for referring business to another provider?
- Yield spread premiums
- Kickbacks and unearned fees (Correct answer)
- Discount points
- Origination fees
Correct answer: Kickbacks and unearned fees
RESPA Section 8 prohibits kickbacks and unearned fees — giving or receiving anything of value for the referral of settlement service business.
Question 3: Which FinCEN rule requires covered financial institutions to identify and verify the identity of the beneficial owners of legal entity customers?
- Customer Due Diligence (CDD) Rule (Correct answer)
- Know Your Customer (KYC) Rule
- Enhanced Due Diligence (EDD) Rule
- Anti-Money Laundering (AML) Rule
Correct answer: Customer Due Diligence (CDD) Rule
FinCEN's Customer Due Diligence Rule, effective May 2018, requires financial institutions to identify beneficial owners with 25% or more ownership and one control person for legal entities.
Question 4: The Unfair, Deceptive, or Abusive Acts or Practices (UDAAP) authority was granted to the CFPB by which legislation?
- Federal Trade Commission Act of 1914
- Dodd-Frank Wall Street Reform and Consumer Protection Act (Correct answer)
- Consumer Financial Protection Act of 1987
- Gramm-Leach-Bliley Financial Services Modernization Act
Correct answer: Dodd-Frank Wall Street Reform and Consumer Protection Act
The Dodd-Frank Act of 2010 granted the CFPB authority to prohibit unfair, deceptive, or abusive acts or practices, adding 'abusive' to the long-standing UDAP standard.
Question 5: Under Regulation E, within how many business days must a financial institution complete its investigation of a reported error on an electronic fund transfer?
- 5 business days
- 10 business days (Correct answer)
- 45 business days
- 60 business days
Correct answer: 10 business days
Regulation E requires financial institutions to investigate and resolve EFT error claims within 10 business days, with an extension to 45 days if a provisional credit is provided.
Question 6: Which examination concept describes the risk that a bank's failure to comply with laws and regulations will result in legal penalties, financial loss, or reputational damage?
- Operational risk
- Strategic risk
- Compliance risk (Correct answer)
- Reputational risk
Correct answer: Compliance risk
Compliance risk is defined as the risk of legal or regulatory sanctions, material financial loss, or loss to reputation arising from failure to comply with laws and regulations.
Question 7: Under the Military Lending Act (MLA), what is the maximum Military Annual Percentage Rate (MAPR) that can be charged on consumer credit extended to covered active duty servicemembers?
- 18%
- 24%
- 28%
- 36% (Correct answer)
Correct answer: 36%
The Military Lending Act caps the Military Annual Percentage Rate at 36% for most consumer credit products extended to covered active duty servicemembers and their dependents.
CRCM Trivia 5
What is the maximum amount the FDIC insures per depositor, per insured bank, for each account ownership category?