RCMS Regulatory Frameworks & Standards 2 — Questions and Answers
Question 1: Under the Dodd-Frank Act, which federal agency is primarily responsible for regulating systemically important financial institutions (SIFIs)?
- Federal Reserve Board (Correct answer)
- Office of the Comptroller of the Currency
- Consumer Financial Protection Bureau
- Securities and Exchange Commission
Correct answer: Federal Reserve Board
The Federal Reserve Board oversees SIFIs designated under Dodd-Frank to reduce systemic risk to the financial system.
Question 2: Which regulatory standard establishes the three pillars of minimum capital requirements, supervisory review, and market discipline for banks?
- Basel I
- Basel II (Correct answer)
- Basel III
- Solvency II
Correct answer: Basel II
Basel II introduced the three-pillar framework covering minimum capital requirements, supervisory review process, and market discipline.
Question 3: A compliance officer discovers that an employee's activity may violate both state and federal regulations that conflict with each other. What legal doctrine generally resolves this conflict?
- Stare decisis
- Federal preemption (Correct answer)
- Comity doctrine
- Conflict of laws
Correct answer: Federal preemption
The Supremacy Clause of the U.S. Constitution establishes federal preemption, meaning federal law supersedes conflicting state law.
Question 4: ISO 37301 specifically addresses which area of organizational compliance?
- Information security management
- Compliance management systems (Correct answer)
- Anti-bribery management
- Environmental management
Correct answer: Compliance management systems
ISO 37301 (replacing ISO 19600) provides requirements and guidance for establishing and maintaining compliance management systems.
Question 5: Which provision of the Foreign Corrupt Practices Act (FCPA) prohibits falsifying books and records to conceal bribery payments?
- Anti-bribery provision
- Accounting provision (Correct answer)
- Whistleblower provision
- Jurisdictional provision
Correct answer: Accounting provision
The FCPA's accounting provisions require accurate books and records and adequate internal controls to prevent concealment of improper payments.
Question 6: Under GDPR, what is the maximum fine for the most serious violations?
- €10 million or 2% of global annual turnover
- €20 million or 4% of global annual turnover (Correct answer)
- €50 million or 5% of global annual turnover
- €100 million or 10% of global annual turnover
Correct answer: €20 million or 4% of global annual turnover
GDPR's highest tier penalty is €20 million or 4% of total worldwide annual turnover of the preceding fiscal year, whichever is higher.
Question 7: The COSO ERM framework's 2017 revision integrated enterprise risk management with which organizational function?
- Internal audit
- Strategy and performance (Correct answer)
- Financial reporting
- Compliance monitoring
Correct answer: Strategy and performance
The 2017 COSO ERM update integrated risk management with strategy and performance to reflect how risk influences an organization's direction.
RCMS Regulatory Frameworks & Standards 2
Under the Dodd-Frank Act, which federal agency is primarily responsible for regulating systemically important financial institutions (SIFIs)?