Part II Chapter 2 Flashcards
balance sheet
A financial statement that reports a company’s
financial condition—including assets, liabilities, and
stockholders’ equity—at a point in time.
bank capital requirements
Rules or regulations that specify the amount of
funds the owners of a bank must contribute to the
business.
Bank Secrecy Act of 1970 (BSA)
A US legislative act under which US banks (and,
in many cases, companies and individuals) are
required to perform due diligence by determining a
customer’s identity and monitoring transactions for
suspicious activity.
capital adequacy
A factor that measures whether the amount of more
permanent sources of funds maintained relative
to the nature and extent of an institution’s risks is
sufficient given management’s ability to identify,
measure, monitor, and control these risks.
capital tax
A type of levy assessed by some countries
(particularly those experiencing an upsurge in
economic growth) on multinational companies that
are headquartered in another country
central bank
An entity that is responsible for implementing and
managing a country’s monetary policy—in other
words, the country’s money supply and interest rates.
Check Clearing for the 21st Century
Act of 2003 (Check 21)
A US law that provided the basis for electronic
clearing of checks by allowing the substitution of a
copy or image of a check for the original document
in the clearing process.
common equity
The capital contributed by stockholders and earnings
retained in the business.
Consumer Financial Protection Bureau
CFPB
An independent consumer protection entity within
the US Federal Reserve that was created as part of
the Dodd-Frank Act. The primary aim of this entity is
to consolidate and strengthen consumer protection
responsibilities and oversee the enforcement of
federal laws intended to ensure the fair, equitable,
and nondiscriminatory access to credit for individuals
and communities.
credit transfer
In an electronic payment system, this is the process
of a payor pushing funds from its account to the
account of the payee.
deposit insurance (guarantee)
A regulatory safeguard that protects the assets of
smaller deposit customers (typically consumers,
although corporate accounts are also often covered
up to a certain amount) who would be most harmed
by a bank failure.
Depository Institutions Deregulation
and Monetary Control Act of 1980
(DIDMCA)
A US legislative act that provided for a phase-out
of interest rate ceilings for financial institutions,
mandated that all depository institutions hold
reserves at the Federal Reserve (Fed), and mandated
that the Fed price or eliminate its float in the checkclearing system.
Dodd-Frank Wall Street Reform and
Consumer Protection Act of 2010
Legislation enacted in the United States in response
to concerns related to the financial services industry
in the wake of the global financial crisis of 2007–
2009. The act had a major impact on the regulation
of banks and other financial institutions, and brought
financial consumer protection under a single
authority.
Electronic Signatures in Global and
National Commerce Act of 2000
(E-SIGN Act)
US legislation that was enacted to support electronic
commerce (e-commerce) initiatives and grant digital
signatures the same legal status as handwritten
ink signatures. It establishes the legal certainty of
e-commerce transactions and provides a measure of
confidence around the enforceability of electronic
transactions.
escheatment
The process of turning over unclaimed assets to the
government, in specific instances.
European Central Bank (ECB)
The central bank for the European Union (EU).
European Payments Council (EPC)
The coordination and decision-making body of the
European banking industry in relation to payments.
European Union (EU)
A union of more than two dozen member countries
that have organized to work toward common
political, social, and economic interests.
Federal Deposit Insurance Corporation
FDIC
An independent agency of the US federal
government whose primary role is to protect
depositors from losses caused by bank insolvency
Federal Reserve (the Fed)
The central bank for the United States, from the
perspective of monetary policy
Financial Action Task Force (FATF)
An international, intergovernmental organization
composed of members from more than 30 countries,
whose primary purpose is the development
and promotion of policies, at both national and
international levels, to combat money laundering and
terrorist financing.
Financial Crimes Enforcement
Network (FinCEN)
The primary US government agency (operating
as a bureau of the US Treasury) that oversees and
implements policies to prevent and detect money
laundering by criminal or terrorist organizations.
Financial Stability Board (FSB)
An entity established to provide international
coordination of national financial authorities and
international standard-setting bodies.
Financial Stability Oversight Council
FSOC
A US agency created under the Dodd-Frank Act,
whose primary responsibility is to prevent systemic
risk from threatening the financial system by
identifying threats to financial stability and gaps
in regulations, and facilitating coordination across
federal and state agencies.
