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Flashcards in Misc Deck (89):
1

Compliance Rating?

generally strong compliance position; capable M; system of internal operating procedures and controls has been established to ensure compliance, but violations occurred, but involve technical aspects of the law or result from oversight;

2

2

Trust Composite?

conduct affairs in a generally adequate manner;

policies and procedures governing important phases of administration or operations may be nonexistent or inadequately defined, but practices are generally appropriate to faithfully discharge the department’s fiduciary obligations

3

3

IT Composite Rating?

self-assessment practices are weak and are generally reactive to audit and regulatory exceptions;

repeat concerns may exist, indicating M may lack the ability or willingness to resolve concerns;

financial condition of the service provider may be weak and/or negative trends may be evident;

while financial or operational failure is unlikely, increased supervision is necessary;

formal or informal supervisory action may be necessary to secure corrective action

3

4

IT Composite Rating?

S&S performance;

modest weaknesses, corrected in normal course;

RM processes adequately identify and monitor;

strategic plans may require clarification, better coordination or improved communication throughout, so M anticipates but responds less quickly to changes in needs

2

5

How do you cite apparent violations of Part 326 for BSA?

(b) (1) program weaknesses

(b) (2) CIP weaknesses

(c) cited for specific pillar

6

Meeting with D- Composite 1 or 2?

36 months or more since the last such meeting

M is rated 3,4, or 5

Any 2 components are 3,4, or 5,

Any component is 4 or 5

Could be B committee if the committee influences policy, meets regularly, consists of reasonable outside representation, and reports regularly to the full B.

7

Composite Rating?

may be significant non-compliance with laws and regs;

RM practices unacceptable;

close supervisory attention required;

formal EA necessary;

poses risk to the DIF;

failure a distinct possibility

4

8

What are the CRA ratings?

Only Saban Needs Saving

Outstanding

Satisfactory

Needs Improvement

Substantial Non-Compliance

9

What type of business fall under Phase I BSA exemptions?

Banks

U.S. dept or agency

Entity established by a U.S. state or political subdivision

Stock traded on the NYSE, NASDAQ (or a sub if 51% owned by the publicly-traded entity)

10

Compliance Rating?

operating procedures and controls aren’t effective and require strengthening, may be accomplished by designating a CO and implementing a comprehensive and effective compliance program; by identifying marginal compliance early, additional supervisory measures can eliminate violations and prevent further deterioration

3

11

Meeting with D - Composite 3?

Quorum required

12

What is the CMP penalty for late or false Call Reports? Inadvertent, not inadvertent, first/second offense, false

Inadvertent: $3,200/day (T1)
Not inadvertent: $32,000/day

Late Filing:
Tier 1: $3,200/day

First Offense: $330/day for 15 days then $600/day

Second offense (within 5 qtrs): $550/day for first 15 days then $1,100/day

Tier 2: $32,000/day

False T1: $3200/day T2: $32,000/day

Knowingly or recklessly with disregard: lesser of $1,425,000 or 1% TA.

13

IT Composite Ratings?

M doesn’t address the technological needs of the entity;

M doesn’t correct audit and regulatory concerns;

financial condition of the service provider is poor and failure is highly probable due to poor operating performance or financial instability;

ongoing supervisory attention is necessary.

5

14

What are the min requirements of Trust Department Management?

Board involvement

Trust dept needs to be its own separate department with trust assets separated from the bank

Must have separate books and records from the bank and reflect all activities

15

Trust Composite?

some problems of relative significance may exist, but none are of such importance as to pose a threat to the trust beneficiaries or to the soundness of the bank;

M is adequate;

the supervisory response is limited to follow-up on correction of criticizable features.

3

16

How many days prior must the FDIC be notified of a change in control in an institution?

60 days

17

IT Composite Rating?

some degree of supervisory concern from moderate to severe weaknesses;

if weaknesses persist, further deterioration in the condition and performance of the bank or service provider is likely;

RM processes may not effectively identify risks and may not be appropriate;

strategic plans are vaguely defined and may not provide adequate direction for IT initiatives, so M often has difficulty responding to changes in needs of the entity;

3

18

What point in the CMP point scale will penalties be accessed?

individuals: > 40

Institutions: > 60

19

What is the deadline to file a SAR?

Within 30 calendar days of detecting criminal activity

If unable to identify a suspect within 30 days, can delay reporting for another 30 days

20

When is CTR filed?

Currency transaction over $10K

deposits, withdrawals, exchanges, or transfer

21

Change in control - what is the definition of control?

Rebuttable presumption?

Acquiring person will own, control, of hold power to vote 25% or more of any class of voting securities of the institution

Rebuttable presumption: Acquiring person or persons will own, control, or hold power to vote 10% or more of any class of voting securities and if:

the institution has securities registered under SEC, or no other person will own, control, of hold the power to vote a greater percentage of that class of voting securities.

22

Composite Rating?

immediate outside financial or other assistance is needed to remain viable;

ongoing supervisory attention is necessary;

pose a significant risk to DIF;

failure highly probable.

5

23

Calculate exam interval

Start counting: from the date the ROE was submitted by the EIC, or 60 days from the LX start date, whichever is less.

24

Why are CMPs assessed?

Punish the violator and deter future violations

25

Compliance Rating?

needs strongest supervisory attention and monitoring; substantial non-compliance with consumer statutes and regs; M has demonstrated its unwillingness or inability to operate within the scope of consumer statutes and regs

5

26

What are the minimum requirements for CIP?

name

DOB

Address

SSN/TIN

27

Composite Rating?

Fundamentally sound;

no component worse than 3;

moderate weaknesses;

well within the B and M’s capabilities and willingness to correct;

stable and are capable of withstanding business fluctuations

2

28

What is the statute of limitation for 8(e) and CMP actions?

5 years of the transaction that is the cause of the action, but in a court case 5 years from time of loss

29

CTR required info?

6 things

Name

Address

SNN/TIN

DOB

Account #

Amount and description of transaction

30

When should a limited scope exam be done?

Change in risk profile

Monitor compliance with a corrective program

Investigate unusual or adverse situations

Determine progress in correcting deficiencies

Assess compliance with supervisory requirements established through an order

31

What are the primary factors in determining CMP assessment amounts?

FIG-AG

Financial resources of the individual charged

Involvement of individual charged

Gain to the individual

Amount of loss

Gravity of the violation

32

What are the IT components that are rated?

MADS

Management

Audit

Development and Acquisition

Support and Delivery

33

Trust Composite?

such problems pose a threat to beneficiaries, and if left unchecked, could evolve into conditions that could ultimately undermine public confidence in the bank;

such departments require special supervisory attention.

4

34

314 (a) vs 314 (b)

314 (a) mandatory information sharing between U.S. Govt and financial institution

314 (b) voluntary information sharing between financial institutions

35

IT Composite Rating?

critically deficient;

in need of immediate remedial action;

serious weaknesses may exist throughout the org.

RM processes are severely deficient and provide M little or no perception of risk;

strategic plans don’t exist or are ineffective;

M and the B provide little or no direction for IT initiatives

5

36

Compliance Rating?

less than satisfactory; cause for supervisory concern; requires more than normal supervision to remedy deficiencies; violations may be numerous; repeat violations may be uncorrected; any overcharges involve a few people and minimal dollars; no discrimination; M may have the ability to comply, but increased efforts are necessary; numerous violations indicate M hasn’t devoted sufficient time and attention

3

37

Composite Rating?

substantial compliance with laws and regs;

RM practices are satisfactory;

no material supervisory concerns;

supervisory response is informal and limited

2

38

IT Composite Ratings?

financial condition of the service provider is severely impaired and/or deteriorating;

failure of the bank or service provider may be likely unless IT problems are remedied;

close supervisory attention is necessary, and in most cases, formal enforcement action is warranted.

4

39

Composite Rating?

RM practices may be less than satisfactory;

require more than normal supervision;

may include formal or informal EAs;

failure appears unlikely b/c of overall strength and capacity.

3

40

What are the essential components of an effective IT MIS?

TRACC

Timeliness

Relevance

Accuracy

Completeness

Consistency

41

exam schedule for non-insured converting to insured?

full scope within 12 months of the last exam prior to conversion

42

Compliance Rating?

M hasn’t exerted sufficient effort to ensure compliance; attitude may indicate a lack of interest that may have contributed to the seriousness of problems; internal procedures and controls haven’t proven effective and are seriously deficient; prompt supervisory action may enable the bank to correct deficiencies and improve its compliance position

4

43

How should evidence of support for a CMP be stored?

Copied and retained in the FO, segregated in a labeled envelope, and kept apart from regular workpapers.

44

CMP may be assessed for the violation of:

Laws or regs

Final or temp orders

Written condition in FDIC applications

Written agreement

45

exam schedule for bank converting to non-member

full scope within 12 months of the last ex prior to conversion

46

What is the criteria for the FDIC's reliance on state examinations?

FIDM

formal/informal arrangements between the state and FDIC are adequate

Ind. determination can be made about the bank's condition based on the State's ROE

Documentation supports the assessments and findings of the Report

Meet exam objectives

47

Part 364 requires banks to have IS programs with the following safeguards?

PAT

Physical

Administrative

Technical

48

what is OFAC?

Regulation that requires FI to block accounts and other assets and prohibits unlicensed trade with specific countries

There is not any regulatory program requirement for compliance; however, FI are subject to the prohibitions and reporting required by OFAC regulations.

49

What is the review requirements for Phase I? (BSA)

Annual review performed only for listed public company and sub

50

Composite Rating?

Some degree of supervisory concern in 1 or more component;

moderate to severe weaknesses, but no component worse than 4;

Management may lack ability or willingness to effectively address weaknesses within appropriate time frames

3

51

Trust Composite?

such conditions evidence a flagrant disregard for the interests of beneficiaries and may pose a serious threat to the soundness of the bank; require immediate corrective action, constant supervisory attention, and the possible imposition of regulatory sanctions

5

52

Trust Composite?

one or more major problems centered in inexperienced or inattentive management, failure to adhere to
sound administrative policies, numerous violations, weak or dangerous operating practices, or an accumulation of unsatisfactory features of lesser importance

4

53

Compliance Rating?

modification in compliance program and/or establishment of additional review/audit procedures may eliminate many of the violations; training is satisfactory; no discrimination, reimbursable violations, or repeat violations

2

54

Meeting with D- Composite 4 or 5?

Quorum required + RD (or designee) must also attend

55

Compliance Rating?

requires close supervisory attention and monitoring to promptly correct serious compliance problems; numerous violations; any overcharges affect a significant number of people and involve substantial money; previous violations remain uncorrected; may be discrimination

4

56

Deadline for filing a CTR?

15 calendar days

57

What are the 3 tiers of CMP?

Tier 1: $7.5K/day for violations of laws/regs; final or temp order; condition imposed in writing

Tier 2: $37.5k/day if party recklessly engages in an U or U practice or breach of fiduciary duty. More than minimal loss to institution

Tier 3: lesser of $1.375MM or 1% of TA for institution. For individual $1.425MM. U or U practice of breach of duty is knowingly committed and causes a substantial loss

58

Composite Rating?

Extremely U&U;

critically deficient performance;

inadequate RM practices;

of the greatest supervisory concern;

volume and severity of problems beyond M’s ability or willingness to correct

5

59

Section 8 of the FDI Act?

8(a) termination of insurance

8(b) Consent Order

8(c) Temporary C&D

8(e) Removal and prohibition

8(g) Temporary Removal/Suspension

8(i) CMPs

60

Compliance Rating?

strong compliance position; capable M; staff is sufficient; effective compliance program; efficient system of internal procedures and controls; changes in consumer statutes and regulations are promptly reflected in policies, procedures and compliance training

1

61

How often does a review need to take place for Phase II exemption companies?

Annual Review

62

When are insured branches of foreign bank eligible for a 18 month cycle?

TA of less than $500MM

Composite RM, Operations Controls, Compliance, and AQ (ROCA) of 1 or 2

Not subject to a formal enforcement action

Not have undergone a change in control during the preceding 12 months

Have Tier 1 and TRBC (foreign bank) of 6% and 10% or have maintained on a daily basis eligible assets in an amount not less than 108percent of the preceding quarter's average third party liabilities

63

Trust Components?

MOECA

Management

Operations, Internal Controls, and Auditing

Earnings

Compliance

Asset Management

64

IT Composite Ratings?

Unsafe or Unsound environment that may impair future viability;

operating weaknesses are indicative of serious managerial deficiencies;

RM processes inadequately identify and monitor risk, and practices aren’t appropriate;

strategic plans are poorly-defined and aren’t coordinated or communicated throughout, so M and the B aren’t ensuring needs are met;

M doesn’t perform self-assessments and isn’t correcting audit and regulatory concerns

4

65

IT Composite Rating?

strategic plans are well-defined and fully integrated, allowing M to quickly adapt to changing market, business, and technology needs;

M identifies weaknesses promptly and takes appropriate corrective action to resolve audit and regulatory concerns;

financial condition of the service provider is strong and overall performance shows no cause for supervisory concern

1

66

Compliance Rating?

M has demonstrated its unwillingness or inability to operate within the scope of consumer statutes and regs; previous regulatory efforts to obtain voluntary compliance have been unproductive; discrimination, substantial overcharges, or practices resulting in serious repeat violations are present.

5

67

Composite Rating?

U or U;

serious financial or managerial deficiencies;

unsatisfactory performance;

severe to critically deficient problems;

not being satisfactorily addressed or resolved;

not capable of withstanding business fluctuations

4

68

Exam schedule for a newly chartered institution?

6 months - limited scope

12 months and annually thereafter through the 7th year- full scope

69

What are the three stages of money laundering?

Placement

Layering

Integration

70

Under what instances should a SAR be filed?

Insider abuse involving any amount

Transactions aggregating $5k or more where a suspect can be identified

Transactions aggregating $25K or more regardless of potential suspects (suspect cant be identified)

Transactions aggregating $5k or more that involve potential money laundering or violation of the BSA

71

Composite Rating?

resistant to outside influences;

substantial compliance;

strongest performance and RM practices;

no cause for supervisory concern

1

72

Trust Composite?

critically deficient in numerous major respects arising from incompetent or neglected administration,
flagrant and/or repeated disregard of applicable laws and regs, or willful departure from sound fiduciary principles and practices

5

73

Trust Composite?

isolated instances of noncompliance with laws, regs or M-prescribed policies or procedures, but corrective action without loss to the fiduciaries is assured

2

74

What type of business falls under Phase II exemptions for BSA?

Non-listed business and payroll customers if:

Had an account for at least 2 consecutive months or before 2 months if determined by a risk based analysis

Make frequent transactions of more than $10k to pay U.S. employees

They're registered in the U.S.

75

What are the primary areas of review for compliance rating?

MVP

Management

Violation

Program

76

IT Composite Ratings?

greater reliance is placed on audit and regulatory intervention to identify and resolve concerns;

financial condition of the service provider is acceptable and while internal control weaknesses may exist, there are no significant supervisory concerns, they’re informal and limited.

2

77

Alternate exams with the state are acceptable when?

Composite 1 or 2

Composite 3 and the bank is stable or improving

78

Actions provoking CMPs should meet one of the following 4 criteria?

Sheraton Was Better for Points

Substantial Loss

Willful, Flagrant, or otherwise evidences bad faith

Bank Insider who benefits

Previous supervisory means ineffective

79

Composite Rating?

generally less capable of withstanding business fluctuations;

more vulnerable to outside influences than Composite 1s or 2s;

may be in significant noncompliance with laws and regs;

3

80

When is an exam letter given to the bank?

Any bank newly assigned a CAMELS composite 3 rating or worse

81

Trust Composite?

Superior in almost every respect;

critical findings are minor, no fundamental deficiency in policies, practices or procedures

1

82

Compliance Rating?

adequate training; violations are relatively minor deficiencies in forms or practices that are easily corrected; no discrimination, reimbursable violations, or repeat violations; promptly corrected by M; no cause for supervisory concern.

1

83

Trust Composite?

experienced and competent staff with demonstrated ability to administer existing accounts and anticipated future business in strict conformity with applicable laws and regulations and in accordance with sound fiduciary principles

1

84

What is the purpose of a trust exam?

Determine if the bank's handling of trust accounts exposes the bank to contingent liabilities, direct liabilities, estimated losses that would impact capital

85

Composite Rating?

Sound in every respect;

components rated 1 or 2;

minor weaknesses, can be handled in a routine manner by the B and M;

most capable of withstanding

1

86

IT Composite Rating?

strong performance in every respect;

generally has components rated 1 or 2;

minor weaknesses, easily corrected;

RM processes provide a comprehensive program to identify and monitor risk;

1

87

Trust Composite?

fundamentally sound, but don’t measure up in 1 or more respects to top rating;

generally effective;

modest weaknesses that are readily correctable

2

88

Banks get consent to exercise trust powers from who? Who grants the trust powers?

Consent from the FDIC

State grants those powers

89

For trust, when does the bank receive an earnings rating?

If trust department has $100MM or more in TA as of the exam date