RCMS Investigation & Remediation Procedures 5 — Questions and Answers
Question 1: Which of the following BEST describes 'triage' in the context of compliance investigations?
- Conducting simultaneous interviews with all witnesses
- Rapidly assessing incoming reports to prioritize and allocate investigative resources (Correct answer)
- Delegating all investigations to external counsel
- Documenting all findings in the compliance management system
Correct answer: Rapidly assessing incoming reports to prioritize and allocate investigative resources
Triage involves quickly evaluating reports to determine severity, credibility, and urgency so resources are allocated to the highest-priority matters first.
Question 2: A compliance team is remediating an anti-money laundering (AML) failure. Which action would most directly strengthen the company's suspicious activity monitoring?
- Increasing the number of compliance officers without changing detection tools
- Enhancing transaction monitoring rules and alert thresholds based on identified gaps (Correct answer)
- Reducing the scope of customer due diligence to speed up onboarding
- Eliminating legacy accounts that triggered the initial alerts
Correct answer: Enhancing transaction monitoring rules and alert thresholds based on identified gaps
Refining transaction monitoring rules targets the specific detection failure that allowed suspicious activity to go unnoticed.
Question 3: Which of the following is an example of a 'detective control' in a compliance program?
- Pre-approval requirements for high-risk transactions
- Segregation of duties in financial processing
- Periodic compliance audits and monitoring reviews (Correct answer)
- Employee compliance training and certification
Correct answer: Periodic compliance audits and monitoring reviews
Detective controls identify compliance failures after they occur, and periodic audits are designed to discover problems that have already happened.
Question 4: When a compliance investigation concludes with no finding of wrongdoing, what is the MOST important next step?
- Publicize the outcome to demonstrate organizational transparency
- Document the investigation closure, retain records per policy, and notify relevant stakeholders appropriately (Correct answer)
- Destroy investigation records to protect employee privacy
- Immediately reopen the investigation if a new complaint is received about the same individual
Correct answer: Document the investigation closure, retain records per policy, and notify relevant stakeholders appropriately
Proper documentation of a closed investigation with no findings protects the organization and ensures records are available if the matter is later revisited.
Question 5: What is the significance of a 'declination letter' from a regulatory agency following a self-disclosure?
- It requires the company to pay maximum statutory penalties
- It indicates the agency has decided not to pursue enforcement action, often reflecting credit for cooperation (Correct answer)
- It obligates the company to conduct a new third-party audit immediately
- It removes the company's obligation to implement corrective measures
Correct answer: It indicates the agency has decided not to pursue enforcement action, often reflecting credit for cooperation
A declination letter signals that the regulator will not pursue enforcement, typically acknowledging the company's cooperation and remediation efforts.
Question 6: During a compliance investigation, which party should determine whether a report should be escalated to the board or audit committee?
- The human resources department acting independently
- The subject of the investigation after being notified
- Legal counsel and the chief compliance officer, based on materiality and governance protocols (Correct answer)
- The external auditors during the annual audit only
Correct answer: Legal counsel and the chief compliance officer, based on materiality and governance protocols
Escalation decisions require legal and compliance leadership to assess materiality and governance obligations before elevating to the board.
Question 7: Which of the following remediation activities is considered a 'preventive control' enhancement?
- Conducting a forensic review of past transactions
- Adding mandatory dual-approval for wire transfers above a defined threshold (Correct answer)
- Performing a gap analysis of historical compliance failures
- Reviewing existing investigation files for closed matters
Correct answer: Adding mandatory dual-approval for wire transfers above a defined threshold
Requiring dual approval prevents a single individual from completing a high-risk transaction without oversight, stopping violations before they occur.
RCMS Investigation & Remediation Procedures 5
Which of the following BEST describes 'triage' in the context of compliance investigations?