International Banking Flashcards
7 cards from real NAB practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 International Banking flashcards as text
What does FATF stand for and what is its primary mandate?
Answer: Financial Action Task Force; setting global standards to combat money laundering and terrorist financing
FATF (Financial Action Task Force) is an intergovernmental body that develops and promotes policies and standards to combat money laundering, terrorist financing, and proliferation financing.
What is the primary objective of the Basel III framework for international banks?
Answer: To strengthen bank capital requirements and improve resilience to financial stress
Basel III strengthens bank capital and liquidity requirements — introduced after the 2008 financial crisis — to make banks more resilient to economic shocks and systemic risk.
What is 'de-risking' in the context of international correspondent banking?
Answer: Banks terminating or restricting relationships with clients or regions perceived as high-risk
De-risking refers to banks exiting or restricting correspondent banking relationships with jurisdictions or client types deemed too costly or risky to manage under AML/CFT compliance obligations.
What does the Foreign Account Tax Compliance Act (FATCA) primarily require?
Answer: Foreign financial institutions to report accounts held by US persons to the IRS
FATCA requires foreign financial institutions to identify and report to the IRS accounts held by US taxpayers, or face a 30% withholding tax on US-sourced payments.
In international banking, what does enhanced due diligence (EDD) specifically require compared to standard KYC?
Answer: Additional scrutiny, senior management approval, and ongoing monitoring for higher-risk relationships
EDD requires deeper investigation — including understanding the source of funds, senior management approval, and more frequent transaction monitoring — for higher-risk customers such as PEPs or high-risk jurisdictions.
Which US regulatory body administers economic and trade sanctions that affect international bank transactions?
Answer: OFAC (Office of Foreign Assets Control)
OFAC administers and enforces US economic and trade sanctions programs against countries, entities, and individuals, and violations can result in severe civil and criminal penalties for banks.
What is a Politically Exposed Person (PEP) in the context of international banking compliance?
Answer: An individual who holds or has held a prominent public function, posing higher corruption risk
A PEP is an individual who holds or has held a senior public position (e.g., head of state, senior politician, senior government official), requiring enhanced due diligence due to higher corruption and bribery risk.