CBA Regulatory Compliance Audits Questions and Answers

Question 1

An auditor reviewing a bank's compliance with the Bank Secrecy Act (BSA) discovers a pattern of cash deposits into a single account across multiple branches on the same day, with each deposit being slightly under the $10,000 reporting threshold. This activity is a significant indicator of:

Accepted Answer

Structuring

Answer

Structuring involves intentionally breaking up a large cash transaction into smaller, individual transactions to fall below the Currency Transaction Report (CTR) reporting threshold of $10,000, for the purpose of evading BSA reporting requirements. A bank must file a SAR when it suspects structuring.

Question 2

Which of the following is the primary objective of a compliance audit focused on the Community Reinvestment Act (CRA)?

Accepted Answer

To assess whether the bank is effectively meeting the credit needs of its entire community, including low- and moderate-income neighborhoods.

Answer

The Community Reinvestment Act (CRA) was enacted to encourage federally insured banks to meet the credit needs of their entire communities, with a particular focus on low- and moderate-income (LMI) neighborhoods. A CRA audit evaluates the bank's performance in lending, investments, and services within these communities.

Question 3

During a review of a bank's Identity Theft Prevention Program, an auditor is primarily concerned with compliance with the rules promulgated under which act?

Accepted Answer

Fair and Accurate Credit Transactions Act (FACTA)

Answer

The Fair and Accurate Credit Transactions Act (FACTA) amended the Fair Credit Reporting Act (FCRA) and required the implementation of the "Red Flags Rules." These rules mandate that financial institutions and creditors develop and implement a written Identity Theft Prevention Program to detect, prevent, and mitigate identity theft.

Question 4

A bank's marketing department launches a campaign for a new savings account, advertising it as "Completely Free." An auditor's review finds that while there are no monthly maintenance fees, a fee is charged if the account balance drops below $100. This practice would most likely be a violation of which regulation?

Accepted Answer

Regulation DD (Truth in Savings)

Answer

Regulation DD, which implements the Truth in Savings Act (TISA), prohibits advertisements that are misleading or inaccurate. It specifically prohibits describing an account as "free" or "no cost" if any maintenance or activity fee, such as a fee for failing to maintain a minimum balance, can be imposed.

Question 5

When performing a regulatory compliance audit of the Gramm-Leach-Bliley Act (GLBA), which of the following is the auditor's MOST critical area of focus?

Accepted Answer

Evaluating the adequacy of the bank's program to protect the confidentiality and security of customers' nonpublic personal information.

Answer

The Gramm-Leach-Bliley Act (GLBA) has two main components: the Privacy Rule and the Safeguards Rule. The Safeguards Rule is a critical focus for auditors, as it requires financial institutions to develop, implement, and maintain a comprehensive written information security program to protect nonpublic customer information.

(CBA) Certified Bank Auditor Practice Test

(CBA) Certified Bank Auditor Practice Test

CBA Regulatory Compliance Audits Questions and Answers