CSC Regulatory Compliance & Guidelines 3 — Questions and Answers
Question 1: Under the Dodd-Frank Wall Street Reform Act, which agency has primary oversight of systemic risk among large financial institutions?
- Federal Reserve Board (FRB)
- Securities and Exchange Commission (SEC)
- Financial Stability Oversight Council (FSOC) (Correct answer)
- Office of the Comptroller of the Currency (OCC)
Correct answer: Financial Stability Oversight Council (FSOC)
The Financial Stability Oversight Council (FSOC) was created by Dodd-Frank specifically to monitor and address systemic risks to U.S. financial stability.
Question 2: An organization's compliance program includes a hotline for reporting violations, but employees rarely use it. According to the DOJ's compliance program guidance, what is the most likely root cause?
- Insufficient technical infrastructure for the hotline
- Lack of genuine non-retaliation culture and fear of consequences (Correct answer)
- Employees are unaware regulatory violations are reportable
- The hotline is only accessible during business hours
Correct answer: Lack of genuine non-retaliation culture and fear of consequences
The DOJ's guidance emphasizes that hotline underuse typically reflects employees' fear of retaliation, indicating a culture that does not genuinely support reporting.
Question 3: Which ISO standard provides a framework specifically for compliance management systems?
- ISO 9001
- ISO 31000
- ISO 37301 (Correct answer)
- ISO 27001
Correct answer: ISO 37301
ISO 37301 (formerly ISO 19600) is the international standard specifically designed for compliance management systems.
Question 4: A consultant reviewing a financial firm's AML controls finds that customer due diligence (CDD) files are incomplete for 15% of high-risk customers. Under FinCEN's CDD rule, what is the immediate priority?
- File a Suspicious Activity Report (SAR) for all 15% of customers
- Remediate the gaps and conduct enhanced due diligence on identified high-risk accounts (Correct answer)
- Suspend accounts until full CDD is obtained
- Report the deficiency to the OCC within 30 days
Correct answer: Remediate the gaps and conduct enhanced due diligence on identified high-risk accounts
The immediate priority is to remediate CDD gaps and apply enhanced due diligence to high-risk customers to meet FinCEN's CDD rule requirements.
Question 5: Under OSHA's General Duty Clause, employers are required to provide a workplace free from recognized hazards. Which of the following best describes a 'recognized hazard'?
- Any hazard listed in OSHA's published standards
- A hazard known to the employer or the industry, even if not covered by a specific OSHA standard (Correct answer)
- A hazard that has previously caused a workplace injury
- A hazard identified during a formal OSHA inspection
Correct answer: A hazard known to the employer or the industry, even if not covered by a specific OSHA standard
A recognized hazard under the General Duty Clause includes hazards known to the employer or the industry, regardless of whether a specific OSHA standard exists.
Question 6: Which element is considered the 'cornerstone' of an effective corporate compliance and ethics program according to the U.S. Sentencing Guidelines?
- A robust training program for all employees
- Tone at the top — demonstrated commitment from senior leadership (Correct answer)
- A third-party compliance audit conducted annually
- A comprehensive written code of conduct
Correct answer: Tone at the top — demonstrated commitment from senior leadership
The U.S. Sentencing Guidelines identify organizational culture and leadership commitment ('tone at the top') as the cornerstone of effective compliance programs.
Question 7: A senior consultant is assessing a company's export compliance program. Which U.S. agency administers the Export Administration Regulations (EAR)?
- Department of State (DDTC)
- Department of Commerce (BIS) (Correct answer)
- Department of Treasury (OFAC)
- Department of Homeland Security (CBP)
Correct answer: Department of Commerce (BIS)
The Bureau of Industry and Security (BIS) within the Department of Commerce administers the Export Administration Regulations (EAR).
CSC Regulatory Compliance & Guidelines 3
Under the Dodd-Frank Wall Street Reform Act, which agency has primary oversight of systemic risk among large financial institutions?