Free CBT Banking Regulations and Compliance Questions and Answers — Questions and Answers
Question 1: A customer reports an unauthorized electronic funds transfer from their checking account. According to Regulation E, what is the maximum liability for the customer if they notify the bank within two business days of learning about the loss?
- The full amount of the transfer.
- $50. (Correct answer)
- $500.
- There is no liability for the customer.
Correct answer: $50.
Regulation E (Electronic Fund Transfer Act) limits a consumer's liability for an unauthorized transaction to $50 if they report it to the financial institution within two business days of discovering the loss or theft of their access device (like a debit card).
Question 2: Which of the following scenarios would require a bank teller to file a Currency Transaction Report (CTR) with FinCEN?
- A customer purchases a cashier's check for $15,000 using funds from their savings account.
- A customer deposits a business check for $20,000.
- A customer makes two separate cash deposits of $6,000 each into their account on the same business day. (Correct answer)
- A customer wires $11,000 to an international account.
Correct answer: A customer makes two separate cash deposits of $6,000 each into their account on the same business day.
The Bank Secrecy Act (BSA) requires financial institutions to file a CTR (FinCEN Form 112) for currency transactions exceeding $10,000 in a single business day. This includes multiple transactions by the same person in the same day that total more than $10,000. The other options do not involve physical currency exceeding the threshold.
Question 3: A bank's responsibility to screen transactions against lists of sanctioned countries and individuals to prevent transactions with terrorists and narcotics traffickers falls under the compliance requirements of which agency?
- The Federal Deposit Insurance Corporation (FDIC)
- The Financial Crimes Enforcement Network (FinCEN)
- The Office of the Comptroller of the Currency (OCC)
- The Office of Foreign Assets Control (OFAC) (Correct answer)
Correct answer: The Office of Foreign Assets Control (OFAC)
The Office of Foreign Assets Control (OFAC), a part of the U.S. Department of the Treasury, administers and enforces economic and trade sanctions against targeted foreign countries, terrorists, and other threats to national security. Banks are required to screen transactions against OFAC's lists.
Question 4: Regulation DD, which implements the Truth in Savings Act (TISA), requires banks to disclose specific information to customers. Which of the following is a key disclosure required by Regulation DD?
- The bank's quarterly profit margin.
- The names of the bank's board of directors.
- The Annual Percentage Yield (APY) on an interest-bearing account. (Correct answer)
- The schedule for the next federal bank examination.
Correct answer: The Annual Percentage Yield (APY) on an interest-bearing account.
Regulation DD's primary purpose is to help consumers make informed decisions by requiring clear disclosure of key account terms. This includes the Annual Percentage Yield (APY), interest rates, fees, and minimum balance requirements, allowing customers to compare deposit products effectively.
Question 5: A customer deposits a $7,000 personal check into their account. Under Regulation CC (Expedited Funds Availability Act), which of the following is an exception that allows a bank to place an extended hold on the funds?
- The check is from an out-of-state bank.
- The customer's account has been open for 45 days.
- The total amount of checks deposited in one day exceeds $5,525. (Correct answer)
- The teller has a gut feeling the check might not be good.
Correct answer: The total amount of checks deposited in one day exceeds $5,525.
Regulation CC permits banks to place exception holds under specific circumstances. One of these is the 'Large Deposit' exception, which applies when the total of checks deposited in a single day is more than $5,525. The bank can then hold the amount exceeding $5,525 for a longer period.
Question 6: A customer brings in $4,000 in cash to purchase a money order. Under the Bank Secrecy Act (BSA) recordkeeping rules, what is the teller's primary obligation?
- File a Currency Transaction Report (CTR) immediately.
- Refuse the transaction as it is suspicious.
- Obtain and record identification from the customer. (Correct answer)
- File a Suspicious Activity Report (SAR) because the customer is using cash.
Correct answer: Obtain and record identification from the customer.
The Bank Secrecy Act requires financial institutions to keep records for cash purchases of monetary instruments, such as money orders or traveler's checks, valued between $3,000 and $10,000. This record must include verified customer identification information. A CTR is not required unless the transaction exceeds $10,000, and the transaction itself is not inherently suspicious to warrant a SAR.
Free CBT Banking Regulations and Compliance Questions and Answers
A customer reports an unauthorized electronic funds transfer from their checking account.
According to Regulation E, what is the maximum liability for the customer if they notify the bank within two business days of learning about the loss?