Regulatory Compliance Flashcards

Under FinCEN's Customer Due Diligence (CDD) Rule, which individuals must a covered financial institution identify as beneficial owners of a legal entity customer?

Answer: Each individual owning 25% or more, plus one individual with significant control

The CDD Rule uses an ownership prong of 25% or more and a control prong of one individual with significant managerial control.

A public company employee believes they suffered retaliation for reporting securities fraud internally. Where and within what period must a SOX Section 806 complaint be filed?

Answer: With OSHA within 180 days of the violation

SOX Section 806 complaints must be filed with OSHA, part of the Department of Labor, within 180 days.

According to Digital Realty Trust v. Somers (2018), what must an employee have done to qualify for Dodd-Frank anti-retaliation protection?

Answer: Reported the suspected violation to the SEC

The Supreme Court held that Dodd-Frank anti-retaliation protection requires reporting to the SEC, unlike SOX Section 806.

Under DOJ's Corporate Enforcement and Voluntary Self-Disclosure Policy, which combination creates a presumption of declination absent aggravating circumstances?

Answer: Voluntary self-disclosure, full cooperation, and timely and appropriate remediation

DOJ policy provides a presumption of declination when a company self-discloses, fully cooperates, and remediates, subject to aggravating factors.

Under Chapter 8 of the U.S. Sentencing Guidelines, how can an effective compliance and ethics program affect an organization convicted of a federal offense?

Answer: It can reduce the organization's culpability score and resulting fine

An effective compliance and ethics program can lower the culpability score, reducing the fine range.

Which USA PATRIOT Act provision provides a safe harbor for financial institutions that share information with one another about possible money laundering or terrorist financing?

Answer: Section 314(b)

Section 314(b) allows voluntary information sharing among registered financial institutions, with safe harbor from liability.

During an investigation, a bank compliance officer tells a customer that a SAR has been filed on their account. What is the regulatory consequence?

Answer: It violates SAR confidentiality rules prohibiting disclosure of a SAR or its existence

BSA rules prohibit disclosing a SAR or information revealing its existence, which is commonly called tipping off.