CSCP Compliance Programs & Risk Management 3

Question 1

FINRA Rule 3120 requires broker-dealers to establish a system to supervise activities of associated persons. What document must the supervisory system be memorialized in?

Accepted Answer

Written Supervisory Procedures (WSP)

Answer

Form BD

Answer

Form U4

Answer

Compliance calendar

Question 2

Which of the following best describes a 'key risk indicator' (KRI) in securities compliance?

Accepted Answer

A forward-looking metric that signals potential compliance risk

Answer

A regulatory penalty imposed after an examination

Answer

The total number of customer complaints filed in a year

Answer

A list of suspended registered representatives

Question 3

Under the USA PATRIOT Act, which federal agency primarily administers the anti-money laundering (AML) requirements applicable to broker-dealers?

Accepted Answer

FinCEN

Answer

SEC

Answer

CFTC

Answer

OCC

Question 4

A compliance officer discovers that a firm's AML policy has not been updated to reflect a recent FinCEN rule change. The best immediate action is to:

Accepted Answer

Update the policy and conduct targeted training for affected staff

Answer

Notify the SEC before updating the policy

Answer

Suspend all new account openings until the policy is revised

Answer

Report the lapse to FINRA within 24 hours

Question 5

What is the purpose of a compliance 'gap analysis' in a securities firm?

Accepted Answer

To identify differences between current practices and required regulatory standards

Answer

To calculate the financial penalty exposure from past violations

Answer

To assess trading performance against benchmark indices

Answer

To determine the number of additional compliance staff needed

Question 6

Which supervisory control is most effective for detecting unauthorized trading by a registered representative?

Accepted Answer

Real-time trade blotter review by a designated supervisor

Answer

Annual branch office inspections

Answer

Customer satisfaction surveys

Answer

Monthly review of registered representative licensing status

Question 7

The concept of 'three lines of defense' in securities compliance assigns primary responsibility for risk management to which line?

Accepted Answer

Business units and front-line staff (first line)

Answer

Internal audit (third line)

Answer

Compliance and risk functions (second line)

Answer

External auditors (fourth line)