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

FINRA Rule 3120 requires firms to establish, maintain, and enforce Written Supervisory Procedures (WSPs) that detail the firm's supervisory system for each applicable regulation.

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

KRIs are forward-looking metrics that provide early warning signals of increasing compliance risk, allowing firms to take proactive corrective action before violations occur.

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

The Financial Crimes Enforcement Network (FinCEN) administers the Bank Secrecy Act and USA PATRIOT Act AML requirements, including those applicable to broker-dealers as 'financial institutions.'

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

The most appropriate response is to promptly update the policy to reflect the regulatory change and then provide targeted training to ensure staff are aware of and can implement the new requirements.

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

A gap analysis compares a firm's existing compliance policies, procedures, and practices against applicable regulatory requirements to identify areas where the firm falls short.

(CSCP) Certified Securities Compliance Professional Practice Test

(CSCP) Certified Securities Compliance Professional Practice Test

CSCP Compliance Programs & Risk Management 3