Questions 6-10 Flashcards
1
Q
ACME national bank plans to acquire Smith Brothers insurance agency and make it an operating subsidiary of the bank. ACME is considered a well-managed and adequately capitalized bank. What regulatory-related action must ACME take to obtain the agency?
A. Complete the sale of the agency and notify the OCC within 10 days
B. Complete the sale of the agency and notify the OCC within 30 days
C. No regulatory notice is required
D. Notify the OCC before completing the sale
A
D
2
Q
What obligation does a bank have to disclose a covered CRA agreement 40 months after it terminates?
A. It must maintain a copy in its CRA public file.
B. It must send a copy to its regulatory agency upon request.
C. It must send a copy to a member of the public upon request.
D. It has no obligation to disclose these covered CRA agreements.
A
D
3
Q
Which of the following parties is responsible for risk management of RDC activities offered by a financial institution?
A. A Third Party Service Provider
B. The individual RDC customer
C. The Legal Department of the Bank
D. The Board of Directors of the Bank
A
D
4
Q
Which of the following does NOT require a Truth-in-Savings Act disclosure?
A. An individual holding the account for personal, family, or household purposes
B. Holders of IRA and SEP accounts when invested in covered accounts
C. Holders of accounts under the Uniform Transfer to Minors Act
D. Accounts established for unincorporated, nonbusiness associations
A
D
5
Q
When is it permissible for a bank that is a government securities broker or dealer to refrain from filing a Form G-FIN-5 or a Form MSD-5 when an employee terminates the associated person status?
A. When the employee files the form
B. When the bank does not have all the necessary information and notifies its regulatory agency
C. When the employee’s status is reinstated within six months
D. When the employee remains employed by the bank and the bank notifies its regulatory agency
A
D
6
Q
First National Bancshares, Inc., a bank holding company, filed an application with its Federal Reserve Bank on March 1 to acquire a subsidiary bank. On March 15 the Federal Reserve Board asked First National for more information. On April 1 the Federal Reserve Bank received the completed application and accepted it. On April 5 the Federal Reserve Bank notified First National of the April 1 acceptance and referred the application to the Federal Reserve Board. Under the normal rules, by what date must the Federal Reserve Board act on the application?
A. June 1
B. April 30
C. June 5
D. July 1
A
A
7
Q
Which of the following items is considered a low-quality asset?
A. An asset in a nonaccrual status
B. An asset on which interest is past due 15 days
C. An asset that will be transferred to the workout area within the next 60 days so that the terms can be renegotiated
D. None of the above
A
A
8
Q
ACME Bank has a joint marketing agreement with Friendly Brokerage Company whereby ACME and Friendly agree to jointly market certain financial products. ACME would like to refer customers to Friendly by providing the Friendly brokerage officer with names of ACME customers who might be interested in the financial products Friendly offers. Friendly has signed an agreement with ACME promising not to disclose any information about ACMEs customers to others. What type of responsibility does ACME have to its customers under the Privacy Regulation?
A. ACME must give a disclosure and opt-out opportunity to all customers.
B. ACME has no disclosure or opt-out responsibilities.
C. ACME must give customers a notice that it provides information to companies with which it has joint marketing agreements.
D. ACME must give an opt-out option but no disclosure.
A
C
9
Q
Which of the following types of transactions should NOT be counted when monitoring the Regulation D transaction limits on money market deposit accounts?
A. ATM transactions
B. ACH utility payments
C. Debit card purchases
D. Internet bill paying transfers
A
A
10
Q
Which of the following criteria accurately describes a small business loan for which a large bank must annually collect and report data?
A. A loan to a business that employs fewer than 50 people
B. A line of credit to a business with assets of less than $5 million
C. A loan with an original principal amount of $1 million or less to a business
D. A loan to a business that does not generally have access to regional or national credit markets
A
D
11
Q
Which of the following is NOT a corporate practice required of bank holding companies?
A. Each bank subsidiary must file a notice with the Federal Reserve before offering a new product.
B. Each bank subsidiary must conduct its operations in a safe and sound manner.
C. Each bank subsidiary must be insured by the FDIC.
D. Each bank subsidiary must file a notice with the Federal Reserve before purchasing any of its own securities.
A
A
12
Q
By what date must the bank send the borrower a statement in connection with an information return on foreclosed or abandoned property?
A. January 15 of the year following the year of the foreclosure or abandonment
B. January 31 of the year following the year of the foreclosure or abandonment
C. February 28 of the year following the year of the foreclosure or abandonment
D. March 1 of the year following the year of the foreclosure or abandonment
A
B
13
Q
A bank provides several value-added services to checking account customers, such as free travel insurance provided by a nonaffiliated insurance company. Each month the bank provides a list of customer names and addresses to the insurance company. What should be the compliance officers GREATEST concern?
A. That marketing materials clearly and conspicuously describe the travel insurance
B. That consumers are aware of this valuable service so the bank retains their relationship
C. That customer service representatives fully describe the features of the checking accounts
D. That the bank has a written agreement with the insurance company and the bank’s privacy notice accurately describes the relationship
A
D
14
Q
ACME Bank is a $600 million institution with 15 branches within three counties. Because of its proximity to Mexico, the bank has many foreign national customers and makes many foreign wire transfers for its customers. Currently the banks branch managers print the OFAC list of SDNs and place them in strategic places in each branch. The wire transfer department keeps its own copy of the list. The compliance officer has implemented an annual auditing program to check the banks compliance with OFAC regulations. The findings of this audit are provided to the banks board of directors annually. The banks regulatory agency has indicated to management that the bank has a high risk for BSA/AML/OFAC compliance. Of the following actions, which would be the most effective to strengthen the banks OFAC compliance?
A. Conduct compliance audits twice a year
B. Purchase and implement interdiction software for the wire transfer area
C. As an internal control procedure, require the BSA officer to check the OFAC Web site daily for any changes to the SDN list
D. Routinely provide account transaction information to federal security agencies so suspicious patterns can be detected
A
B
15
Q
Martha Smith of First National Bank is attempting to close a large commercial loan to a manufacturing equipment company. In negotiating the interest rate on the loan Martha states that if the company will move some of its demand accounts to the bank, it could get a lower interest rate. Is this wrong?
A. Yes. It violates the anti-tying provisions.
B. Yes. It is a restraint of trade.
C. No, unless moving the accounts is a condition of the loan.
D. No. The bank may condition the loan on the customer placing a deposit in the bank.
A
D
16
Q
The following accounts are at State National Bank:
John Doe
John Doe and Joe Smith
Mary Smith and Joe Smith
Fred Richards and Mary Smith
What is the minimum number of initial privacy notices the bank must give?
A. Three
B. Four
C. Six
D. Seven
A
B
17
Q
Trust Co. and First National Bank are located in the same city and each has assets of over $50 million. The president of First National has been asked to serve as a director of Trust Co. First National has no trust department and no trust operations. Trust Co. operates solely as a trust company. Would this relationship violate the prohibitions against management official interlocks in Regulation L?
A. Yes, because the institutions are in the same city.
B. No, because the institutions are not both depository institutions.
C. No, because the institutions do not compete.
D. Maybe, but it depends on the size of the institutions.
A
A
18
Q
Martha Whitmire, the BSA Compliance Officer for First National Bank, is responsible for monitoring the bankﾒs daily currency activity and wire transfers, for compliance with information retention and reporting requirements. Ms. Whitmire notices during her review on March 10 that, during the previous two weeks, a transaction occurred on the same account several times during the week. The activity appeared at one branch office as cash deposits in dollar amounts under the reporting thresholds. Ms. Whitmire discusses this activity with the branch manager and determines that this same deposit activity occurred several times during the previous six weeks. She then conducts a more extensive examination of the accountﾒs activity for several months and discovers that cash deposits were made at one branch office and purchases of bank cashierﾒs checks were made by withdrawals from the same account at a different branch office. All withdrawals and purchases of cashierﾒs checks were for the identical amount as the cash deposits. Which statement best describes Ms. Whitmireﾒs responsibility? A. Complete a CTR for each of the cash activities at the branch office B. Make no report of the activities because the transactions were not discovered until after the 15-day reporting deadline C. Report the account activity to senior management for further review D. Report the account activity as suspicious account activity and recommend that a SAR be filed
A
D
19
Q
In order to improve the efficiency and effectiveness of its Right to Financial Privacy Act compliance program, what should a bank do FIRST?
A. Centralize the receipt and handling of all government agency requests for customer records with a designated officer
B. Include in the bank’s loan application an authorization for customers to sign, giving the bank permission to disclose financial records to government agencies as needed
C. Simplify the bank’s handling process by adopting a policy that the bank will accept only judicial subpoenas for customer financial records
D. Create an ongoing training program on the Right to Financial Privacy Act for all bank officers and employees
A
A
20
Q
To which of the following activities does the FFIEC Guidance on Authentication apply?
A. Internet banking only
B. Telephone and Internet banking
C. Call center banking only
D. Internet, telephone, and call center banking
A
D
21
Q
A member bank wants to sell assets to an affiliated bank that is 100 percent owned by the same bank holding company. Is this transaction allowed?
A. No. It is prohibited.
B. Yes, but it is subject to an aggregate limit of 10 percent of the member bank’s capital and unimpaired surplus.
C. Yes. It is permitted, if the assets are not low quality.
D. Yes, but it must be classified on the receiving bank’s books as low-quality assets.
A
C
22
Q
Which state receives the reporting and escheatment of unclaimed property?
A. The state where the bank is domiciled, if different from the bank holding company
B. The state of the customer’s last known address, if available and not foreign
C. The state where the property is located, if a deposit account
D. The state chosen by a bank holding company, if a multistate operation
A
B
23
Q
State National Bank is a $250 million community bank. It makes a variety of consumer and commercial loans, regularly transmits funds via wire transfers for its customers, and issues commercial and stand-by letters of credit. Which of the following transactions can State National make without checking the OFAC SDN list and without incurring liability?
A. Send a wire transfer via its correspondent bank in New York for a commercial customer.
B. Sell a cashier’s check payable to a third party.
C. Cash an on-us check over-the-counter for a noncustomer.
D. None. The bank can be liable for all.
A
D
24
Q
Timothy Edwards inherited some money from his father and decided to put the funds in several accounts at First National Bank. Timothy has an individual savings account with a balance of $1,400,000. He and his wife, Sylvia, have a savings account with a balance of $750,000. They also have a joint NOW account with a balance of $280,000. In addition, they have the following trust accounts for their children, John and Suzanne: Timothy, trustee for John (balance $195,000); Timothy, trustee for Suzanne (balance $195,000); Sylvia, trustee for John (balance $120,000); Sylvia, trustee for Suzanne (balance $120,000). What is the total balance in the accounts of this family that is covered by deposit insurance, assuming a SMDIA of $250,000?
A. $1,380,000
B. $1,660,000
C. $1,130,000
D. $1,140,000
A
A
25
Fastfood, Inc., a nationwide restaurant chain, opened an account at First National Bank last year. Fastfood is making daily cash deposits in amounts of $15,000 to $20,000. First National needs to determine if this company is an exempt person. What should the bank do first?
A. Because the restaurant is an established depositor, the bank should provide an unlimited exemption for cash deposits and withdrawals.
B. The bank should look in the newspaper or on the Internet to determine if Fastfood, Inc.'s, stock appears on one of the listed exchanges.
C. The bank should ask the company if it qualifies as a listed business.
D. The bank should perform a corporate records check to determine if the company is chartered in the United States.
B
26
What should a bank do when it receives a request from a customer to transfer funds to an individual in Iraq?
A. Conduct the transfer as requested
B. Conduct the transfer if the individual and the financial institution are not on the SDN list
C. Block the transfer
D. Conduct the transfer and then notify OFAC immediately
B
27
For how long must a bank keep records of transactions involving currency in amounts greater than $10,000?
A. Two years
B. Three years
C. Five years
D. Seven years
C
28
As a general rule under the Right to Financial Privacy Act, what must be provided to a bank before information can be released to the requesting party?
A. A copy of the customer's driver's license, passport, or other suitable identification
B. The customer's telephone number, so oral authorization to release information can be obtained easily
C. A copy of the customer's written authorization to release information
D. A letter from a government official requesting the information
C
29
When may the Federal Reserve institute supplemental reserve requirements in addition to the basic reserve requirements?
A. When additional balances are needed for clearing purposes
B. When supplemental reserves are needed to impose monetary policy
C. When additional balances are needed to supplement the regular reserve cost structure
D. When the President directs it by Executive Order
B
30
Under the Interagency Statement on Retail Sales of Nondeposit Investment Products what disclosure must the banks investment sales representative make to the customer?
A. The bank's regulatory agency
B. The sales commission resulting from the investment purchase
C. That the investment product is not guaranteed by the bank
D. The arbitration procedure for resolving disputes over investment advice
C
31
ABC Bank regularly sends email messages to its customers. Some of the emails are promotions for various bank products. Others are notifications of account balances, requested by the customer. John Smith, a customer of the bank, asks not to receive commercial email messages from the bank. What must the bank do?
A. Stop sending any emails to Mr. Smith within 30 days of the request
B. Stop only the advertising emails to Mr. Smith within 30 days of the request
C. Stop sending any emails to Mr. Smith within 10 days of the request
D. Stop sending only the advertising emails to Mr. Smith within 10 days of the request
D
32
Which of the following is NOT a factor considered by the Federal Reserve Board when it evaluates an application under Regulation Y?
A. The financial strength of the applicant
B. The management strength of the applicant
C. The current nonbanking activities of the applicant
D. The effect of the transaction on competition
C
33
If a bank receives a request for financial disclosure, how may the bank fulfill this request?
A. Provide copies of the call reports covering the current and previous year
B. Provide a copy of its statement of condition covering the year immediately preceding the request
C. Provide a copy of its most recent, unaudited financial statement
D. Provide copies of its Uniform Bank Performance Reports for three consecutive years
A
34
A bank that is a government securities broker accepts money from a customer for the purchase of securities on Monday and does not purchase the securities by the end of the day on Tuesday. Does the bank have any responsibilities under the Government Securities Act?
A. No. The bank has fulfilled its responsibilities under the Act.
B. Yes. The bank must purchase the securities before the close of business on Wednesday.
C. Yes. The bank must deposit the money in an account of the customer at the close of business on Tuesday.
D. No. The bank has until the close of business on Wednesday to purchase the securities before being liable to the customer for failure to effect a purchase.
C
35
Which of the following actions is acceptable under the financial reporting regulations?
A. Attaching a narrative explanation by management of the reasons for a cease and desist order as a part of the annual disclosure
B. Attaching a copy of the bank's last safety and soundness examination to the annual disclosure
C. Including a statement that indicates that the bank's regulatory agency has reviewed the financial information
D. Using an unaudited financial statement for the past two years as an annual disclosure statement
A
36
In which of the following cases would First National Bank be required to give a branch closing notice?
A. Removing its ATM from the local grocery store
B. Opening a deposit-taking facility in a kiosk during a college fair for one weekend
C. Moving its central branch across the street
D. Closing its near-town neighborhood branch
D
37
Of the following actions, which one is NOT recommended by the OCCs advisory letter as a necessary tool of management oversight of insurance and annuity sales?
A. Hiring competent personnel
B. Establishing a separate insurance agency
C. Auditing systems and controls
D. Requiring a member of management to actively oversee this function
B
38
Mrs. Evans, a customer of First National Bank, deposits $15,000 in cash to her account. During the transaction, Mrs. Evans explains that she received the money in the mail from her sister in Europe. What responsibility does the bank have?
A. Complete a Currency Transaction Report (CTR)
B. Complete a United States Customs form 4790 (CMIR)
C. Complete both a currency transaction report and a CMIR
D. Complete a CTR and encourage Mrs. Evans to file a CMIR
D
39
Which of the following institutions is exempt from the coverage of CRA?
A. State National Bank of Ashgrove, a $15 million bank in a rural community, not located in an MSA
B. Trust Company, Inc., an institution offering only trust services located in a large urban area
C. ACME Savings Association, a federal thrift institution located in a medium-sized midwestern city, included in an MSA
D. First National Bank, a $250 million bank located in a rural area, not in an MSA
B
40
Country A (a foreign country that is boycotting Country B, another foreign country) has ordered goods from ABC, a U.S. corporation. Country A has opened a letter of credit with Overseas, Inc., a foreign bank. The letter of credit specifies that ABC must certify that it does not do business with Country B. Overseas, Inc., sends a telegram to First National Bank, a U.S. bank, stating the major terms and conditions of the letter of credit and asking First National Bank to confirm the letter of credit. The telegram does not state the boycott provisions. Overseas mails the letter of credit to First National Bank and asks First National Bank to confirm it. What may First National Bank do?
A. First National Bank must confirm it if it previously agreed to do so.
B. First National Bank may advise ABC of the letter of credit and administer its disposal, but may not confirm it and must report it to the Department of Commerce and the IRS.
C. First National Bank may do nothing but return the letter of credit to the issuing bank and report to the IRS.
D. First National Bank must confirm the letter of credit but should also report it to the Department of Commerce.
B
41
Information reports must include which of the following details?
A. Name, address, and TIN of the borrower
B. Purpose of the loan
C. Address of the property securing the mortgage
D. Fair market value of the property at the time of the loan
A
42
Which of the following is MOST effective in strengthening an anti-money-laundering program involving cash transactions?
A. Review all deposits of $25,000 or more
B. Complete CTR worksheets on all cash transactions of $5,000 or more
C. Complete SAR worksheets on all cash transactions of $5,000 or more
D. Monitor cash transactions of less than $10,000 for suspicious patterns
D
43
OFAC is an office with which U.S. government agency?
a. State Department
b. Central Intelligence Agency
c. Office of the President
d. U.S. Treasury Department
D
44
Which of the following bank products is NOT subject to the disclosure provisions of the Interagency Statement on Retail Sales of Nondeposit Investment Products?
A. Fixed-rate annuities
B. Variable-rate annuities
C. Variable-rate savings accounts
D. Mutual funds
C
45
First National Bankshares, Inc., a bank holding company, held substantially all of the voting stock of an equipment manufacturing corporation as collateral for a loan to the owner. On May 15 the borrower defaulted and on September 1, after proper notice was given, the bank foreclosed its security interest on the stock and exercised its rights to vote the stock at appropriate times. On December 31 the bank transferred the stock to a subsidiary corporation, FNB, Inc., to market the stock for sale more effectively. What is the longest time period that FNB, Inc., can possibly hold the stock?
A. Up to two years from September 1
B. Up to five years from September 1
C. Up to two years from December 31
D. Up to five years from December 31
B
46
State National Bank has a Web site on which it advertises all of its products. One page of the Web site is devoted to the products of its affiliate, State National Investment Products, Inc. The affiliate sells uninsured mutual funds and various other investments not insured by the FDIC. What are State Nationals responsibilities for this advertising?
A. None. The affiliate is responsible.
B. None. Because it is a Web site, the advertising rules do not apply.
C. The bank must make sure the FDIC logo is properly placed.
D. The bank must make sure that the noninsured disclosures are on this page and that the FDIC logo does not appear
D
47
In order to qualify for the fraud prevention adjustment an issuer must:
A. Prove that it has historical losses that average at least 1% of its transactions each calendar year
B. Implement fraud prevention and detection policies
C. Offer identify theft protection to its cardholders
D. Allow debit transactions to be processed on at least three unaffiliated payment card networks
B
48
A bank is planning to sell eight branches. The compliance officer participates on a bank committee to oversee the process. What should be the compliance officers PRIMARY concern?
A. That the bank's revenues will not be affected severely
B. That the branches are closed in accordance with bank policy
C. That customers of the branches will continue to have access to banking services
D. That the bank's confidential information is returned to the main office
B
49
Second National has decided to close one of its less profitable neighborhood branches. Which of the following actions is NOT required of the bank under federal law?
A. Publish a notice of the closing in the local newspaper
B. Send a notice to its regulatory agency
C. Send notices to the branch customers
D. Post a notice at the branch
A
50
First National Bank is giving away gifts with all new certificates of deposit over $5,000. How must a portable stereo worth $250 be treated on the account disclosure?
A. It is a bonus and, therefore, is considered to be interest and does not have to be disclosed on the account disclosure.
B. It is interest and must be included in the simple interest rate on the account disclosure.
C. It is neither a bonus nor interest and does not have to be disclosed on the account disclosure.
D. It is a bonus, and not interest, and must be disclosed on the account disclosure.
D
51
Under what circumstances will a G-FINW (a withdrawal as a government securities dealer) become effective in less than 60 days?
A. If the bank requests a shorter time period
B. If the regulatory agency determines that a shorter time period would be appropriate
C. If the bank ceases doing business as a securities dealer
D. If the bank has no employees that qualify as associated persons
B
52
First State Bank, a state nonmember institution, plans to purchase a company that would be a financial subsidiary of the bank. First State will send a notice to the FDIC of its proposed acquisition. Of the following factors, which one would NOT be relevant to the FDICs consideration of the banks acquisition?
A. First State Bank's asset size
B. Whether First State Bank is well capitalized
C. First State Bank's CRA rating
D. The impact of the acquisition on First State Bank's safety and soundness
A
53
A bank has a stand-alone ATM in a high crime area. Due to concerns for the safety of individuals using the ATM, management decides to close it. According to branch closing policy statements issued by federal regulators, which of the following actions should the bank take?
A. No action is required because an ATM is not, by definition, a branch.
B. Post a notice at the ATM at least 30 days before the intended closing date.
C. Notify the bank's federal regulatory agency at least 90 days before the intended closing date.
D. Mail a notice to all customers at least 90 days before the intended closing date.
A
54
Under the Interagency Statement on Retail Sales of Nondeposit Investment Products, what may a bank teller do?
A. Discuss the past performance of a bank-related mutual fund
B. Transfer mutual fund shares from an investment savings account to an IRA account
C. Take the business card of a customer who has asked to purchase a bank related mutual fund and give it to a licensed representative
D. Assist a customer in determining eligibility to purchase a bank-related mutual fund
C
55
Which of the following types of security devices is required for each bank, at minimum, under the Bank Protection Act?
A. Full-time security guard
B. Tamper-resistant locks on exterior windows and doors
C. Vault door made of steel that is at least 3 inches thick
D. Bullet-proof glass at all windows
B
56
Which of the following characteristics is most likely to be considered High Risk for a bank's BSA/AML risk assessment?
a. The bank has identified a moderate number of high risk customers and businesses
b. Low turnover of key personnel or frontline personnel
c. Bank offers significant international private banking services and products
d. Bank's customer base is increasing due to acquisitions and new branches
C
57
ABC Co. signs a contract to export goods to Country G, a boycotting country. Payment will be made by a letter of credit confirmed by First National Bank. The letter of credit requires the goods to be shipped on a ship eligible to enter the port of Country G in conformity with its laws and regulations and that the insurer of the goods has an agent in Country G. Country Gs laws prohibit blacklisted ships from calling at its ports and blacklisted insurance companies from qualifying agents in Country G. First National Bank confirms the letter of credit. Did the banks action constitute an agreement to participate in or cooperate with an international boycott, and is it subject to IRS reporting requirements?
A. Yes. The action is an agreement to cooperate with or participate in a boycott and, yes, it is subject to the reporting requirements.
B. Yes. The action is an agreement to participate in a boycott but no, it is not subject to the reporting requirements.
C. No. Because the bank is not responsible for knowing the laws of Country G, it is not in participation with or in cooperation with a boycott.
D. No. The confirmation of a letter of credit is not sufficient to be in participation or cooperation with a boycott.
A
58
According to Regulation D, when may interest be paid on money market deposit accounts?
A. At maturity
B. When there are six or fewer preauthorized transfers permitted per month
C. When the deposit is less than $100,000
D. If the financial institution imposes a service charge when there are more than six preauthorized transfers per month
B
59
When does a gift accepted by a banker clearly violate the Bank Bribery Act?
A. When it is given for personal reasons
B. When it is given with corrupt intent
C. When it is valued at a dollar amount exceeding $50
D. When it is not given in connection with a generally accepted holiday
B
60
A bank representative is selling insurance products in, or on behalf of, the bank. What may the representative NOT require the customer to do?
A. Pre-pay a portion of the initial premium
B. Complete an application for the insurance on the premises
C. Obtain a medical examination for life insurance coverage
D. Purchase the insurance from an affiliate of the institution
D
61
The mortgage lending department of Bank XYZ received some inquiries from potential applicants who are visually impaired. The bank would like to comply with ADA concerning these potential applicants, but it does not want to spend a significant amount of money. Which of the following statements is true?
A. The bank must have its loan application and disclosures translated into Braille.
B. The bank may have a loan assistant read each loan application and disclosure document to the applicant and assist in completion of the forms.
C. The bank may require the applicant to bring a sighted friend or relative to the bank to assist in completing the application.
D. The bank may make a policy not to lend money to blind persons.
B
62
Under the ADA, what can an employer do?
A. Inquire about a disability if the disability is obvious to the interviewer at the time of the job interview
B. Inquire about a disability when offering a job provided the disability is related to the job requirements
C. Refuse to make an accommodation for a disability if 50 persons or fewer are employed
D. Note the disability in the employee's file so that other managers will be aware of it when interviewing the employee for future position changes
B
63
If the Department of Homeland Security requests information from a bank for purposes of combating terrorism, which of the following is true?
A. The bank may require a subpoena
B. The bank may inform the customer of the release of information, if asked
C. The bank may request a certificate of compliance with the Right to Financial Privacy Act before providing the information
D. The bank does not have to provide the information until a federal court requires it
C
64
Bank policies and procedures for check collection must include what procedure to follow when a bank has actual knowledge that checks for restricted transactions have been received from a bank customer:
A. Procedures for determining the action to take, including when the account should be closed
B. Procedures for determining when all checks on the account must be monitored
C. Procedures for circumstances when only certified checks may be accepted
D. Procedures for circumstances when no checks on foreign accounts may be accepted
A
65
Transactions with which of the following government securities would NOT subject a bank to the registration requirements of the Government Securities Act?
A. Obligations of the Farm Credit System
B. GNMA securities
C. U.S. Savings Bonds
D. FNMA obligations
C
66
First National Bank has several exempt customers. ﾕ Alpha is an exempt person because its stock is listed on a major stock exchange. ﾕ Beta is an exempt person because it meets the nonlisted customer requirements. ﾕ Zeta is exempt because it is a payroll customer. For which customer(s) must the bank conduct an annual review to determine its continuing eligibility to be exempt from CTR filings? A. Alpha B. Beta C. Zeta D. Alpha, Beta, and Zeta
D
67
What is the maximum number of government securities transactions a bank may have and still remain exempt from the Government Securities Act?
A. 100 per year
B. 250 per year
C. 400 per year
D. 499 per year
D
68
When completing and filing a SAR, what is the bank NOT required to do?
A. Submit a copy of the supporting documentation with the SAR
B. Submit the SAR within 30 days of the initial detection of facts
C. Report the SAR information to the bank's board of directors
D. Maintain a copy of the SAR and supporting documentation for 5 years
A
69
Which of the following factors would NOT be considered when evaluating whether specific behavior by a banker violates the statute?
A. The social and family ties of the banker
B. The standard for business amenities and entertaining in that particular part of the country
C. Whether there was a demonstrable business purpose
D. Whether a business transaction was consummated as a result
D
70
State National Bank offers credit life and disability insurance on all consumer loans. This credit-related insurance is sold by a third party, but the bank collects a commission on all sales. The bank also sells hazard insurance through its affiliated insurance agency. Which of the following actions is legal for State National?
A. Require all consumers to purchase credit life insurance through the bank
B. Require only certain consumers to purchase credit life insurance through the bank
C. Require all borrowers with real property loans to provide insurance to protect the collateral
D. Require borrowers on real estate loans over $50,000 to purchase hazard insurance through the bank
C
71
A compliance officer receives a call from a loan officer who asks for advice on what she should do with a stock certificate (1,437 shares of IBM) from a new loan customer who wants to pledge it in support of a loan that has been approved at your bank. What should the compliance officer tell her FIRST?
A. Retain a copy of the certificate in the loan file
B. Retain the original certificate in the branch vault for the term of the loan
C. Record the certificate information and give the original back to the customer
D. Contact the SIC to determine if the certificate was reported as lost, counterfeit, or stolen
D
72
By which date must an interest reporting statement be sent to the borrowers last known address?
A. January 15 of the year following the year the interest is paid
B. January 31 of the year following the year the interest is paid
C. February 28 of the year following the year the interest is paid
D. March 1 of the year following the year the interest is paid
B
73
Which of the following employment practices is NOT legal under ADA?
A. Establishing a policy that prohibits hiring alcoholic applicants
B. Establishing a policy that prohibits smoking at any time at work
C. Holding employees who are certified alcoholics to the same performance standards as other employees
D. Refusing to hire an employee who currently uses illegal drugs
A
74
Acme Community Bank does NOT disclose any nonpublic personal information about its customers except to its computer processor, its attorneys for loan documentation, and to a national credit reporting agency. What privacy notices is Acme required to give?
A. Initial and annual notices to consumers and customers
B. Initial and annual notices to customers
C. Initial, annual, and opt-out notices to customers
D. Initial, annual, and opt-out notices to customers and consumers
B
75
Issuing Bank, a foreign bank, maintains an account with First National Bank, a U.S. bank. Issuing Bank issues a letter of credit in favor of ABC, Inc., a U.S. corporation. The letter of credit contains a boycott provision. The letter of credit provides that any negotiating bank may obtain reimbursement from Issuing Bankﾒs account at First National Bank by certifying that the conditions of the letter of credit have been met. Issuing Bank does not send First National Bank a copy of the letter of credit. May First National Bank reimburse negotiating banks for the letter of credit when it contains a boycott provision?
A. Yes. First National Bank did not know of it, so it may reimburse a negotiating bank.
B. No. First National Bank is under a duty to determine the underlying conditions of any letter of credit it pays.
C. No. First National Bank should request a copy of the letter of credit at the time of its payment and then refuse to pay once it is aware of the provision.
D. Yes, provided ABC Company is not a participant in the boycott.
A
76
Mr. Roberts has three loans at First National Bank: Loan A made to purchase a car, secured by the car; Loan B made to purchase stock, secured by a lake lot; and Loan C made to pay taxes, secured by a rental house he owns. Last year he paid $2,500 in interest on Loan A; $550 in interest on Loan B; and $1,000 in interest on Loan C. How much interest will First National Bank report to the IRS?
A. $4,050
B. $1,000
C. $1,550
D. $2,500
B
77
The Veterans Administration requested some information from First National Bank regarding a customers loan records. The VA provided the bank with a customer authorization form signed by the customer on March 1. The authorization gave the VA the right to review loan records only from March 1 until June 30. The VA requested records on March 15, April 17, May 22, and June 12. The bank complied with each request and supplied the records. Has the bank complied with the Right to Financial Privacy Act?
A. Yes, provided the records provided relate only to the customer's loans.
B. Yes, provided the customer has the right to revoke the authorization at any time.
C. No, the authorization was for too lengthy a time period.
D. No, the VA is not covered by the law.
C
78
Your bank has identified an account that is subject to OFAC sanctions and has blocked the account. What additional responsibilities does the bank have with respect to the blocked account?
a. Transfer the funds to the U.S. Treasury Department within 10 business days
b. Report the blocked account to OFAC within 10 business days
c. Notify the accountholder of the procedures for obtaining an OFAC license
d. Notify your primary regulator
B
79
First National Bank advises Country A, a boycotting country, on various U.S. investments. Country A instructs First National Bank not to recommend for investment any shares of certain blacklisted companies. First National Bank follows this instruction. Has First National Bank participated or cooperated in an international boycott under the IRS regulations by this action?
A. Yes. The companies are the subject of a boycott.
B. No. The bank may agree not to recommend certain companies.
C. Yes, if the companies are part of a boycott.
D. No, but the bank must report this action to the IRS.
B
80
Which of the following is NOT an acceptable method of obtaining information under the Right to Financial Privacy Act?
A. A request with customer authorization
B. An administrative subpoena
C. An informal letter
D. A search warrant
C
81
Regulation II permits an issuer to receive an adjustment of 1 cent to its interchange transaction fee if:
a. It issues only government-administered payment programs and certain reloadable general-use prepaid cards not marketed as gift cards
b. It develops and implements policies and procedures reasonably designed to identify and prevent fraudulent electronic debit transactions
c. It discloses the fee to consumers prior to account opening
d. The transaction is conducted outside the issuer's home state
B
82
Which of the following interest-bearing accounts is EXEMPT from Form 1099 annual information reporting requirements under IRS regulations?
A. Time certificates of deposit
B. Money market deposit accounts
C. Individual retirement accounts
D. Negotiable order of withdrawal accounts
C
83
Under CRA, a large bank has the option to report:
a. Small farm loans
b. Affiliate loans
c. Community Development loans
d. Small business loans
B
84
First National Bank received the following requests for financial information. For which of them would the bank receive reimbursement for its costs under Regulation S?
A. A summons from the IRS for information on several customer checking accounts
B. A request from the FINRA for records of the bank in connection with an investigation of the bank
C. A request from the GAO for information pursuant to an audit of the Government National Mortgage Association
D. A request from the VA for a customer's name and address pursuant to an internal VA investigation of the customer's activities
D
85
Which of the following is NOT a written record the bank should retain in complying with the Bank Bribery Act?
A. A copy of the bank's internal code of conduct
B. A list of all gifts received by bank officers during the year
C. Disclosures of unauthorized gifts
D. A list of all bank officers' outside business interests
B
86
Which of the following must a ﾓlargeﾔ bank maintain as part of its CRA program? A. A record of director, officer, and employee community involvement, and a listing of loans made to low- and moderate-income individuals B. Description of its assessment area, written comments and responses, and the public portion of the regulator's most recent CRA performance evaluation C. Copy of the bank's CRA Notice and the bank's most recent five years of CRA disclosure statements D. A comprehensive record of all CRA-related training completed by employees during the past two years
B
87
Which of the following groups of employees should be trained on the detailed use of W-9 forms?
A. Senior management
B. New account officers
C. Auditors and accountants
D. Security officers
B
88
Under Regulation GG which is a responsibility of regulated depository institutions?
A. Review check transactions on consumer accounts that regularly have large checks deposited
B. Screen ACH transactions of commercial accounts
C. Implement due diligence procedures for new commercial accounts
D. Monitor wire transfer instructions
C
89
Which of the following bank products are considered to be transaction accounts?
A. A savings account from which the bank pays third parties weekly pursuant to the depositor's written requests mailed to the bank
B. A savings account from which the customer regularly makes more than six telephone transfers per month
C. A money market certificate of deposit where the interest is credited monthly to another account of the depositor
D. A savings account into which weekly deposits are made from a checking account pursuant to the depositor's telephone requests
B
90
A recent audit revealed that the bank's personal trust division was failing to determine whether securities being accepted from new trust customers have been reported as lost or stolen. To address the root cause of this problem, what should the compliance officer do FIRST?
A. Inquire with the SIC about all securities noted in the audit
B. Contact the bank's primary regulator to determine the best course of action
C. Retrain all personal trust administrators on the lost and stolen securities requirements
D. Review the policies and procedures for accepting securities in new personal trust relationships to ensure securities verification
D
91
Which of the following would NOT be acceptable under the Bank Bribery Act and the relevant guidelines?
A. A luncheon paid for by a bank customer after a transaction is closed
B. A gift of a hunting rifle to a loan officer from a borrower at Christmas
C. The gift of a gold watch to a loan officer from a customer who is the loan officer's cousin
D. An award of a writing pen and pencil set to a bank officer by a civic organization
B
92
First National Bank does not have the TINs of several borrowers with mortgage loans. What should the bank do to fulfill the mortgage interest reporting regulations?
A. Mail a one-time request for TINs by certified mail to each borrower who has failed to provide one
B. Post a notice in its mortgage lending lobby that TINs are required for mortgage loans
C. Mail a separate request for TINs annually to borrowers who have failed to provide one
D. Include a request for TINs in the annual mailing of the payment coupon book
D
93
In order to properly release records on the basis of a customer authorization, which of the following must the bank do?
A. Make sure that statement is signed and notarized
B. Record the statement in the official records of the county where the bank is located
C. State that the customer may revoke the authorization at any time before the records are released
D. Have the statement acknowledged by the government agency requesting the records
C
94
Which of the following is an accurate statement according to the requirements of the customer identification program regulations?
A. A bank must always require documentary verification of a customer's identification
B. A bank may waive any part of the CIP requirements if senior management approves the waiver and there is a good cause
C. A physical address or a post office box is acceptable for any new customer
D. The bank's CIP program must enable it to form a reasonable belief about the identity of the person
D
95
First National Bank (FNB) purchased a table for $500 at the Governorﾒs re-election fundraising dinner last fall. FNB President Sally Holmes tells Mary Watkins, the municipal securities principal, that the bank is planning to participate in the upcoming state highway bond. What does Ms. Watkins tell President Holmes? A. The bank cannot participate without prior approval of the MSRB. B. The bank can participate because national banks are exempt from MSRB rules. C. The bank can participate, provided it includes the contribution on its next disclosure. D. The bank cannot participate within two years of a contribution to the issuer.
D
96
For which of the following business activities must a bank holding company obtain prior approval of the Federal Reserve Board?
A. Operating an auto club service
B. Serving as a safe deposit company
C. Operating as a management consulting firm for financial institutions
D. Selling installment loan data processing
A
97
Consider the following deposit balance information:
Ann Jones $50,000
Ann Jones $50,000
Jim Smith and Ann Jones $50,000
Jim Smith $75,000
Ann Jones: Agent for Jim Smith $75,000
Ann Jones and Jim Smith $100,000
TOTAL $400,000
How much of the $400,000 is FDIC insured if the SMDIA is $250,000?
A. $275,000
B. $325,000
C. $350,000
D. $400,000
D
98
Which of the following must be included in a branch closing notice to a bank's regulatory agency?
A. Comments from customers who oppose the closing
B. Detailed statement of the reasons for the closing
C. Copy of the notice to be sent to affected customers
D. Copy of board minutes reflecting the decision to close
B
99
First National Bank has received a request from the Securities and Exchange Commission (SEC) for financial records. The customer has given permission to disclose the information. The bank can be reimbursed at the stated rate for all but one of the following costs. Which cost(s) would NOT be reimbursed?
A. Actual fee paid to an offsite storage facility for retrieving and copying records
B. Employee time spent in retrieving and organizing the records at a rate of $22 per hour
C. Actual costs of the CDs the electronic records will be stored on
D. $500 paid to the bank's attorney for a review of the SEC request to determine its validity and to advise the bank of its course of action
D
100
Which of the following is (are) NOT covered by the regulation?
A. All banks regardless of insurance sales.
B. A lender who indicates to the consumer that he or she is selling insurance on behalf of the bank
C. A person to whom the bank refers consumers and who has a contract with the bank to receive commissions on sales of insurance
D. A person who sells insurance to nonconsumers for other than personal, family, or household purposes
D
101
First National Bank has foreclosed on several loans. One of the loans is not subject to the requirement to submit an information return on the foreclosed property. Which loan is most likely NOT covered by the regulations?
A. A loan to Brown & Associates, a local law firm, to purchase furniture, secured by the furniture
B. A loan to Mrs. Lynch to purchase stereo equipment for use in her office waiting room
C. A loan to Dr. Stevens to purchase kitchen appliances
D. A loan to Mr. and Mrs. Sanders to purchase a computer for their antique shop
C
102
Of the following situations, which situation does NOT qualify as an exception to the Right to Financial Privacy requirements?
A. When the U.S. attorney is seeking customer records pursuant to the Federal Code of Civil Procedure in a case where the customer and the government are parties
B. When the bank believes that an officer has committed a crime against the bank and supplies information to the FDIC
C. When the OCC is conducting an examination of the financial institution
D. When the Federal Trade Commission (FTC) is seeking financial information on a customer as part of a large investigation for which no charges have yet been issued
D
103
On a nontransferable certificate of deposit, which of the following activities is NOT allowed?
A. The customer's certificate is redeemed early owing to his or her death.
B. The customer discounts the certificate on a public market.
C. The customer pledges the certificate against his or her consumer loan.
D. The certificate is redeemed through the judicial action of a creditor exercising its legal remedies under the law.
B
104
Which of the following activities is permitted under ADA?
A. Issuing a policy against making loans to health care providers who regularly work with infectious patients
B. Prohibiting smoking anywhere in the bank building
C. Providing readers to visually impaired loan applicants for a $15 fee
D. Requiring disabled depositors to use a teller window that is specially constructed for the use of disabled persons
B
105
First National Bank is attempting to determine which of the following customers would qualify as exempt persons:
Nationwide Foods, Inc., is a national company with stock listed on the New York Stock Exchange
National Paper Products, is a wholly owned subsidiary of Nationwide Foods, Inc.
Products Incorporated, a depositor for three months, is a regional company whose stock is designated a NASDAQ Capital Markets Company and that sells and leases large boats
Century Enterprises, a local company owning several local restaurants, is a long-time bank customer and frequently makes cash deposits in excess of $10,000. All of Centurys stock is owned by a local family.
Which of these customers would qualify as an exempt person?
A. All except for Nationwide Foods, Inc.
B. All except for National Paper Products
C. All except for Century Enterprises
D. All except for Products Incorporated
D
106
How long after discovery does a bank have to report any lost or missing securities when criminal activity is suspected?
A. 90 calendar days
B. 1 business day
C. Never. Law enforcement must report
D. 10 business days
B
107
A financial institution will be in compliance with the blocking requirements of Regulation GG if:
A. It monitors debit card transactions to block any Internet gambling transactions
B. It notifies all customers that Internet gambling transactions are illegal
C. It restricts transactions to accept only those not originated on the Internet
D. It relies on compliance procedures implemented by the payment system operator
D
108
A bank municipal securities dealer has 30 employees in its municipal securities operation. How many municipal securities principals must it have?
A. At least one
B. At least three
C. No more than five
D. At least two
D
109
In which of the following circumstances is it LEAST appropriate for a bank to file a SAR regarding Internet activity?
A. Bank determines that one of its customers is the victim of identity theft
B. Bank becomes aware of identity theft of its domain name (i.e., another entity selects a name similar to the bank's in order to confuse customers and obtain confidential financial information)
C. Bank discovers that someone has hacked into its data system in order to obtain confidential customer data
D. Bank determines through its transaction-monitoring program that a customer is making electronic transfers between his own checking and savings accounts that are just below the $10,000 reporting level
D
110
Which of the following countries are currently subject to the Office of Foreign Assets Control Regulations?
A. North Korea
B. Jordan
C. Bahrain
D. Russia
A
111
The manager of Main Street branch calls and relates the following information: John Smith purchased a cashiers check for $1,000 cash at 10:00 a.m. on Tuesday. At 11:30 a.m. Mr. Smith returned and purchased a cashiers check for $2,500 cash and deposited travelers checks totaling $9,000 into his checking account. At 4:00 p.m. Mr. Smith returned and deposited $8,000 cash into his checking account. This deposit was after normal banking hours, so it was recorded as of Wednesdays business date. What action should the bank take?
A. None, because no single cash transaction exceeded $10,000
B. File a Currency Transaction Report (CTR) for $11,500
C. Record the $1,000, $2,500, and $9,000 transactions on the bank's monetary instrument sales log because the total exceeds the $3,000 threshold
D. Record the $1,000 and $2,500 transactions on the bank's monetary instrument sales log because the total exceeds the $3,000 threshold
D
112
Which of the following sources is the least desirable to use when monitoring a correspondent banks capital?
A. A national rating agency's report on the correspondent bank
B. The correspondent bank's own call report
C. The correspondent bank's annual report to shareholders
D. A national newspaper's story on the correspondent bank's financial condition
D
113
A customer of the bank has made a request to the CEO for a copy of the bank's most recent regulatory report of examination. He bases his request on the Disclosure of Financial Information lobby notice. The CEO asked her assistant to get a copy of the report from you to sent to the customer. What should you do?
a. Give the assistant the copy so she can send it to the customer
b. Tell the assistant that you will send it as soon as you verify that the person is really a bank customer
c. Let the assistant know that the bank may not release the exam report to the person because it is prohibited by law
d. Let the assistant know that she should respond to the customer informing him that he can obtain the exam report directly from the regulator of the bank
C
114
Assuming that the following are interest-bearing accounts at First National Bank and the SMDIA is $250,000:
Jim $250,000
Jim and Fred $180,000
Fred $350,000
Fred and Jim $160,000
Susan and Jim $300,000
How much of Freds money is covered by deposit insurance?
A. $420,000
B. $500,000
C. $350,000
D. $340,000
A
115
For what can a Federal Reserve Bank be liable when transmitting payment orders through the Fedwire?
A. Consequential damages
B. Interest on funds not properly received
C. Any damages by agreement with the sender
D. Punitive damages not set forth in an agreement
B
116
On March 1, First National Bank opened three accounts:
1) a savings account for Margaret Nelson, who did not have a TIN but signed a certification that she had applied for one;
2) a money market savings account for Linda Miller, who could not remember her TIN but promised to provide it at the earliest possible date; and
3) a certificate of deposit for John Whiteside, who completed a Form W-9 but provided a TIN with only eight numbers.
Ms. Nelson provided her newly acquired TIN to the bank on April 15, Ms. Miller provided her TIN on April 5, and Mr. Whiteside provided his TIN to the bank on March 10. Interest was paid on all of these accounts on March 31, and the bank withheld 28 percent of the interest payments. On April 20 all the payees requested that the withheld interest be refunded. What should the bank do?
A. Refund the withheld interest to all payees
B. Refund to Ms. Nelson and Mr. Whiteside because the interest was erroneously withheld
C. Refund only to Mr. Whiteside because the interest was erroneously withheld
D. Refund only to Ms. Nelson because the interest was erroneously withheld
B
117
First National Bank is a wholly owned subsidiary of Bank Holding Company, Inc. Which of the following companies is NOT an affiliate of First National Bank?
A. A company that owns 60 percent of Bank Holding Company, Inc.
B. A company of which First National owns 100 percent of the stock, set up solely to hold the title to the First National Bank building
C. A company established to sell securities and that is 100 percent owned by Bank Holding Company, Inc.
D. Another bank that is owned by Bank Holding Company, Inc.
B
118
Mammoth Enterprises is a new customer to the bank. It is a wholly owned subsidiary of Mammoth Corporation. Which of the following statements, if true, would make Mammoth Enterprises an exempt customer at the bank?
A. Mammoth Corporation is a London corporation, trading on the London Stock Exchange.
B. Mammoth Corporation is a U.S. corporation with unlisted stock.
C. Mammoth Corporation is a U.S. corporation trading on the American Stock Exchange.
D. Mammoth Enterprises is a U.S. corporation primarily in the investment banking business.
C
119
If a bank is a government securities broker or dealer, what are its responsibilities when it obtains a Form G-FIN-4 or an MSD-4 from an employee?
A. Retain the form for 10 years
B. Verify the accuracy of all information on the form
C. Verify the accuracy of the information by inquiring of all employers of the employee for the previous three years
D. Verify the accuracy of the information by inquiring of all employers of the employee for the previous five years
C
120
ABC Bankﾒs call center uses free time to call its customers and former customers to inform them of bank promotions. ABC does not want to purchase the national Do-Not-Call list due to the expense involved. What must ABC do to avoid the requirement to purchase this list? A. Establish written policies and train its personnel B. Call only customers with whom it has a business relationship C. Make sure it follows the recorded call rules D. Nothing, banks are exempt from the requirement to check the list
B
121
Which of the following is NOT a requirement of CRA?
A. To delineate the bank's assessment area(s)
B. To collect loan data
C. To approve the bank's CRA statement at an annual board meeting
D. To report small business loan data
C
122
Which of the following transactions does NOT require prior approval of the Federal Reserve Board?
A. The formation of a bank holding company
B. The acquisition by a bank holding company of a subsidiary
C. The acquisition of 25 percent of voting stock of a bank by another bank, in good faith, in its fiduciary capacity with no power to vote
D. The acquisition of 25 percent of voting stock of a bank by another bank in its fiduciary capacity for the benefit of the acquiring bank's employees
C
123
A bank wants to generate revenue by selling banners on its web site. Customers will be able to go to an advertisers site by clicking on a banner on the banks home page. Under the privacy regulations, what should the bank do?
A. Revise its privacy disclosure
B. Execute a confidentiality agreement with each advertiser
C. Execute a joint marketing agreement with each advertiser
D. Take no action, as none is required
D
124
If the lender is subject to the mortgage interest reporting requirement, which of the following actions is NOT required?
A. The lender must file an information return with the IRS.
B. The lender must report the amount of interest and points on the information return.
C. The lender must report the loan balance as of December 31 of the year preceding the year the report is filed.
D. The lender must send a statement to the borrower.
C
125
Which of the following account monitoring systems would not achieve compliance with Regulation Ds classification of savings accounts?
A. The bank allows customers to open money market savings accounts and make unlimited withdrawals by check. However, after the sixth check the bank converts the account to a regular checking account for the remainder of the month. At the beginning of the next month, the account reverts to a money market savings account until the customer writes a seventh check on the account.
B. The bank allows customers to make only the required number of withdrawals and preauthorized transfers on money market accounts, but the bank has no system for preventing the customer from writing too many checks on the account. The bank reviews its records and warns its customers who make too many withdrawals that the account will convert to a checking account if too many withdrawals occur again.
C. The bank offers money market accounts and has a sophisticated computer program that will not allow an improper number of transactions to occur.
D. The bank offers money market accounts. If the depositor makes too many transfers, the account converts to a transaction account and does not convert back to a non-transaction account.
A
126
Which of the following actions is NOT a requirement of the banks directors in implementing an information security program?
A. Approve the information security program
B. Determine whether the information security officer is qualified
C. Physically audit the bank's online banking system
D. Review management reports on information security periodically
C
127
Bob Jones, president of ACME bank, has had a banking relationship with Linda OReilly, a local real estate agent for several years. Ms. OReilly keeps most of her deposit accounts with ACME and also has had several personal loans there. Over a three-month time period, Ms. OReilly consistently (two or three times a week) brings to the bank a series of money orders in amounts ranging from $7,000 to $15,000, made payable to her in denominations of $1,000, and asks the teller to take them and issue one cashiers check payable to her. After this activity has continued for three months, Mr. Jones notices the frequency of cashiers checks issued to Ms. OReilly on a management report. It catches his attention because he does not know why Ms. OReilly would need this number of cashiers checks. On inquiry, the head teller explains the weekly transactions. Which of the following statements best describes Mr. Joness responsibility?
A. He should immediately file a SAR. There is no logical explanation for this activity.
B. He should immediately file a CTR. Ms. O'Reilly is trying to evade the BSA currency transaction.
C. He should ask Ms. O'Reilly why she is conducting these transactions and then determine whether to file a SAR.
D. He is not required to do anything. Mr. Jones is well acquainted with this customer, and it is not illegal to purchase cashier's checks.
C
128
Which of the following elements is NOT required to be in a repurchase agreement between a bank that is a government securities dealer and a counterparty?
A. A statement that the funds are not insured by the FDIC
B. A list of the specific securities that are the subject of the agreement
C. A provision for substitution of securities if they can be substituted
D. A statement that the bank is a regulated government securities dealer
D
129
FA presents cash to the bank and seeks to wire it to his spouse, RA, in Iran. The OFAC list identifies RA as a specially designated national. Under OFAC Regulations, what should the bank do?
A. Block the transfer
B. Conduct the transfer as requested and take no further action
C. Conduct the transfer as requested and notify OFAC immediately
D. Conduct the transfer only if the bank determines that Iran is not a blocked country
A
130
For a U.S. bank with domestic and foreign locations, which transaction does NOT require an information return to report the amount of interest paid?
A. A loan made to James Roberts, a U.S. resident, payable at the bank's New York office, to purchase securities secured by the borrower's home in Mexico
B. A loan made to Robert and Louise LeBlanc, who are resident aliens, payable at the bank's New York office, secured by a piece of real property located in Canada
C. A loan made to Smith and Withers, a partnership formed for the practice of law, located in the United States, payable at the bank's New York office, guaranteed by Mr. Smith and Mr. Withers, and secured by the law firm's office building
D. A loan made by Mrs. West, a U.S. citizen, to purchase a mobile home and the lot on which it will be placed; both the mobile home and lot are located in the United States
C
131
A bank may include all of the following in the narrative portion of its financial disclosure except for one. Which of these pieces of information CANNOT be disclosed?
A. Information relating to mergers and acquisitions
B. Information related to a regulatory enforcement action that currently applies to the bank
C. An excerpt from the latest regulatory examination prepared by the bank's regulatory agency
D. The bank's future plans for product development
C
132
First National Bank requires all its professional and executive customers when opening an account to sign a statement authorizing the release of financial information to government agencies on request. Is this type of authorization effective for purposes of the act?
A. No, such a statement cannot be required as a condition of doing business
B. Yes, with proper disclosures to the customer
C. Yes, if the bank requires the customer to sign a new authorization statement every three months
D. Yes, if the customer is notified within 30 days of each release of records to a government agency
A
133
If records are obtained pursuant to a search warrant, when must the government agency notify the customer of its receipt of the customerﾒs financial records? A. Within 10 days after serving the search warrant B. Within 30 days after serving the search warrant C. Within 60 days after serving the search warrant D. Within 90 days after serving the search warrant
D
134
In April Lillian Redmond, the teller supervisor for First National Bank, discovers five counterfeit $20 bills in several teller drawers. In May and in June she discovers two additional counterfeit $20 bills. She has no knowledge of criminal activity on the part of any of the banks employees or customers. She does not suspect any particular person in this transaction. Which of the following statements is true?
A. Ms. Redmond must report the counterfeit funds on a SAR and must name the most likely individual(s) on the report.
B. Ms. Redmond must report the counterfeit funds on a SAR but is not required to name any individual(s) on the report.
C. Ms. Redmond need not file a SAR on this incident because the total amount is less than $25,000.
D. Ms. Redmond need not report this incident on a SAR because each incident is less than $5,000.
C
135
Which of the following advertising activities indicate that a bank would NOT be exempt from SEC registration requirements?
A. Listing its securities transfer services as a service the bank provides for IRA accounts along with other IRA benefits
B. Listing its securities services for trust accounts in the bank's extensive trust services brochure
C. Mentioning in a print advertisement that the bank provides accommodation securities trades for its regular custodial accounts
D. Stating in an advertisement concerning employee benefit plan services that the bank provides securities brokerage services for employee benefit plan accounts
C
136
In which of the following cases is a branch closing notice required?
A. Bank A decides to stop cashing checks for noncustomers at its neighborhood branch.
B. Bank B and Bank C merge. Each has a branch in the near-town neighborhood. The merged organization is closing the branch that was formerly Bank B and merging it into the branch that was formerly Bank C.
C. Bank D is closing its drive-through facilities in its near-town neighborhood branch, although its regular facility is remaining.
D. Bank E is closing its near-town facility because of its outmoded building and equipment. Bank E has commissioned a study from a local development center to determine if it is feasible to re-open its branch in the future.
D
137
ABC Bank would like to send faxes to as many people as possible within its community to introduce some new product offerings. To which group may ABC legally send a fax?
A. Anyone within its local community
B. Its existing customers only
C. Its existing customers and former customers only
D. Its existing customers, former customers, and anyone who has made an inquiry or application in the past about the bank's services
D
138
Which of the following accounts is subject to reserve requirements?
A. A savings account owned by an individual
B. An IRA account
C. A time deposit owned by a trust for an individual
D. A checking account owned by an individual
D
139
Which of the following activities is NOT a permissible nonbanking activity?
A. Servicing mortgage loans
B. Providing general courier services to the businesses around the bank office
C. Providing mortgage loan data processing services to mortgage companies
D. Acting as a broker for credit life insurance
B
140
Your bankﾒs president comes back from an industry conference and tells the compliance officer that she attended a presentation about OFAC. She heard the bank could be fined for not adhering to OFAC requirements. Thus, she has directed that every bank transaction be reviewed for OFAC compliance. What is the most appropriate statement the compliance officer could make to the bank president? A. The bank is already in compliance because OFAC checks are performed on all new depositors B. The bank has assessed its OFAC risk and has implemented risk-based OFAC procedures C. OFAC does not apply because the bank does not conduct business in foreign countries or with foreign nationals D. Banks are usually not fined for OFAC violations unless they conduct transactions with SDNs or blocked countries
B
141
Which of the following actions is illegal under the Foreign Corrupt Practices Act?
A. Paying a license fee to a government to conduct business in the country
B. Paying a documentation fee to a government agency for filing corporate documentation
C. Paying an expedited fee to a customs agent to insure that goods will move quickly through the customs process
D. Paying a fee to a governmental agency designated for police and fire protection within a city limit
C
142
Jayne Logan, a loan officer at State National Bank, has recently recruited Mr. David Roberts as a new loan customer. She has known Mr. Roberts for 10 years and handled his lending transactions at another bank where she previously worked. As his first transaction with State National Bank, Mr. Roberts pledges stock that is traded on the NYSE. The stock is received directly from Mr. Roberts, who has his secretary personally deliver it to the bank. Is the bank required, in this instance, to send a lost or stolen securities inquiry regarding the stock? Why or why not?
A. No. Because Ms. Logan has known Mr. Roberts for more than five years, no inquiry must be sent.
B. Yes. Because Mr. Logan is a new customer to the bank, the inquiry must be sent.
C. No. Because Mr. Logan's secretary personally delivered the stock certificates, no inquiry must be sent.
D. Yes. All stock pledged against a loan that is traded on the NYSE must have an inquiry sent.
B
143
Bank A offers safe deposit services in a vault area that contains a door too narrow for wheelchair passage. The bank cannot widen the door because of the vault construction. Therefore, when a customer in a wheelchair needs access to a safe deposit box the customer cannot enter the vault. The bank provides viewing rooms for all safe deposit customers, and one of these rooms has a door wide enough for a disabled customer to enter. Which of the following must the bank do to provide safe deposit box service to wheelchair customers?
A. Remove the old vault and install a new vault to allow wheelchair access
B. Construct an alternative facility in which to store the safe deposit boxes of wheelchair customers
C. Require wheelchair customers to be accompanied by a walking individual to retrieve the safe deposit box for the customer
D. Bring the safe deposit box to the customer and provide an accessible area where the customer may privately have access to the contents
D
144
Which of the following is a true statement regarding a mutual holding companys subsidiary holding company?
A. It may issue stock to anyone without restriction
B. It may only issue stock to its parent
C. It must obtain FRB approval before issuing stock to any person except its parent
D. It may issue stock to its parent, or any other existing stockholder
C
145
Which of the following is true of a banks CRA strategic plan?
A. It must be limited to a one-year term.
B. It must have measurable goals.
C. Affiliates must have their own plans.
D. Even if the bank has multiple assessment areas, it must have one strategic plan.
B
146
Generally, a financial institution is required to ascertain if securities certificates they have taken by pledge, transfer, or otherwise have been reported as missing, lost, counterfeit, or stolen. When is it NOT required to take such actions?
A. When the securities certificate is received directly from the issuer or issuing agent at issuance.
B. When the bank officer personally knows the individual pledging the certificate.
C. When the securities certificate received as part of a transaction has a face value of $20,000 or less.
D. When the securities certificate is received directly from an insured delivery service.
A
147
A compliance officer is constructing a review of a transaction in which M, a deposit account customer, used cash to purchase travelersﾒ checks in an amount of $4,000. The compliance officer must determine compliance with financial recordkeeping and currency reporting regulations. Which of the following pieces of information must be part of the bankﾒs records for this transaction? A. M's date of birth B. M's deposit account number C. The serial numbers of the travelers' checks purchased D. The name of the branch where the transaction occurred
C
148
Which of the following institutions could be examined for CRA under the intermediate small bank performance standard?
A. Bank A, a $230 million bank
B. Bank B, a $700 million bank
C. Bank C, a $50 million bank
D. Bank D, a $2 billion bank
B
149
Which of the following is a requirement in the HITECH Act for business associates?
A. Encrypt all email transmissions
B. Filter all internet traffic for viruses
C. Implement password protocols
D. Perform background checks on employees
C
150
First National Bank made a loan to Lawrence & Co. for the purpose of purchasing landscape equipment, secured by a storage lot the company owned. The borrower made payments for a year and then defaulted. Three months passed without any communication or payments from the borrower, despite the banks efforts to locate the companys owners. The company appears to have ceased operations. What is the banks BEST course of action?
A. Do nothing, because the bank has no actual knowledge of abandonment and has not foreclosed on the property
B. Make reasonable inquiries to determine whether the property is abandoned and if so, report it as abandoned
C. Locate the borrower, foreclose on the property, and report the transaction as a foreclosure
D. Report the property as abandoned
B
151
First National is developing a consumer checking account that can access a line of credit. This is the first time the bank has ever had such a product, although this type of credit facility has been popular with other banks in town. To determine what interest rate to charge on this account, an officer of First National called some of his friends at other local banks offering this type of credit and asked several questions, including the interest rate charged on this type of account and what internal factors the banks use to set the rate. After obtaining this information, First National determines that it could charge approximately 2 percent more than it originally planned. Is there anything wrong with this course of action?
A. Yes. Communicating with competitors for purposes of setting prices is wrong.
B. No. Communication itself is never wrong regardless of the subject matter.
C. Yes. The bank should have disguised its identity in calling its competitors.
D. No. The bank could probably have determined the prices eventually without calling the banks directly.
A
152
Which of the following bank policies does NOT comply with the Interagency Policy Statement on the Retail Sales of Nondeposit Investments?
A. Supervisors and sales personnel will receive compensation based on the volume of sales each department achieves as well as the effectiveness of the department's ability to find suitable investments for customers.
B. All bank employees engaged in the sale of nondeposit investments will provide the bank's required disclosures to all customers before the purchase of a nondeposit investment product.
C. No teller will discuss nondeposit investment products with a bank customer.
D. Tellers and new accounts personnel will receive a $25 fee for all customers referred to the nondeposit investment department on the customer's purchase of an investment product.
D
153
ABC Bank has several customers with hearing disabilities. Of the following, which statement is true?
A. The bank can require its customers to bring hearing companions to interpret for them
B. The bank must hire an interpreter to assist with communications with disabled customers
C. The bank is not required to make any accommodations to disabled customers
D. The bank must reasonably provide auxiliary aids and services to assist in communications with its disabled customers
D
154
Which of the following accurately describes disclosure requirements under Regulation DD?
A. Reference must be made to all required disclosures regardless of whether they apply to a particular deposit account.
B. The effects of closing an account must be disclosed if accrued interest may not be paid to the consumer.
C. Check printing charges must be disclosed for accounts where checks are required.
D. If interest is compounded, the frequency of compounding need not be disclosed if crediting of interest practices is disclosed.
B
155
In which of the following activities may a bank engage and NOT be considered a municipal securities dealer?
A. Underwriting municipal securities
B. Buying securities for the bank's own account
C. Providing advice to customers regarding the purchase of municipal securities
D. Engaging in research and giving investment advice regarding municipal securities
B
156
ABC Bank does NOT operate a Web site or online service and has no presence on the Internet. What are ABC Bankﾒs obligations under the Childrenﾒs Online Privacy Protection Act? A. It has no compliance obligations under the Children's Online Privacy Protection Act B. It must fulfill the parental notice requirements for live transactions with a child C. It must provide children's privacy disclosures when opening an account for a child D. It must provide lobby disclosures to the public, generally regarding privacy when dealing with children
A
157
When maintaining an account involving a fiduciary, what must be done with the evidence of the fiduciary relationship?
A. It may be kept by the depositor in his or her records at home or at his or her place of business.
B. It must be expressly disclosed in the deposit account records.
C. It may be maintained by the depositor or the bank as long as the records are clear.
D. It must be forwarded to the FDIC at the time of account opening.
B
158
First National Bank sold several of its mortgage loans to individual investors and now services the loans for the individuals. First National Bank collects more than $600 on most of these mortgages and deposits the money into the account of the investors. At the end of each year, First National Bank sends the investors a summary of transactions on the mortgages and a detailed breakdown of the principal and interest payments made. Who is responsible for filing the mortgage interest information returns?
A. The investors, because they own the loans and the money is collected for them
B. The investors, because they have the necessary information from the servicer
C. First National Bank, because it was the first owner of the loans
D. First National Bank, because it collects the interest and has the information necessary to file the information return
D
159
ABC Banks Internet Web site has the following statement on the home page: You wont believe our sky-high CD rates. Rates start at 1.5 percent. This statement has a link next to it that takes the viewer to another page with the following information:
Minimum to open the account: $25,000
Substantial penalty for early withdrawal
Principal compounded monthly
APY = 1.65 percent
One of these pieces of information must appear on the home page. Which one must be on the same page as the advertisement?
A. Minimum to open the account: $25,000
B. Substantial penalty for early withdrawal
C. Principal compounded monthly
D. APY = 1.65 percent
D
160
A subsidiary of First National Bank can legally participate in all but one of the following businesses. In which business may the subsidiary NOT legally participate?
A. Selling securities
B. Selling insurance
C. Developing real estate
D. Providing financial planning advice
C
161
Which of the following types of savings account transfers are unlimited by Regulation D?
a. An automatic transfer from checking to savings
b. A debit card withdrawal from savings at an out of state grocery store
c. A home computer instruction to move funds from regular savings to a MMDA
d. A telephone transfer from savings to cover an overdraft on a checking account
A
162
Which of the following is a high-net-worth customer?
A. An individual with $5 million in assets, including her home
B. A corporation with $15 million in revenues
C. A couple with a net worth of $10 million
D. An individual who is not acting with his spouse, with $1 million in assets and another $3 million in community property
C
163
ACME Bank would like its tellers to help sell insurance products to new and existing customers. The tellers would refer customers to personal bankers who have insurance licenses from the state. The bank would like to reward tellers by giving them a small percentage of the commission for each policy sold where the sale resulted from a referral. Which of the following statements presents ACMEs biggest concern in complying with the Consumer Protection in Sales of Insurance regulation?
A. It is difficult for many people to get an insurance license.
B. It is hard for tellers to handle so many types of products.
C. It is hard to physically separate insured deposit products from insurance products.
D. Tellers should not be rewarded only when the referral results in a sale.
D
164
Which of the following is a true statement regarding the imposition of charges for reserve deficiencies?
A. A penalty is always required for deficient reserve balances
B. Federal Reserve Banks may waive penalties for deficient reserve balances
C. An institution may choose to pay a penalty or maintain excess reserves during the next reserve period
D. Penalties are optional with the Federal Reserve Bank in all circumstances
B
165
A bank is considering canceling its agreement with a broker to which it currently leases space in its lobby. The new plan would include an agreement with a different broker, but bank employees would complete product sales. What should the compliance manager do FIRST?
A. Establish a licensing program for bank employees
B. Establish a training plan for employees who will be selling the nondeposit investment products
C. Obtain copies of SEC and NASD rules regarding nondeposit investment products
D. Determine the additional compliance risk for the bank as a result of this change
D
166
First National Bank made a loan to a nonbank affiliate of its holding company that is secured by stocks, bonds, and debentures. At the outset of the loan, First National had collateral with a market value equal to 150 percent of the loan amount. Over time, some of the collateral has been retired and amortized. Some has dropped in value. What is the responsibility of the bank regarding the collateral?
A. The bank has no responsibility once the loan is made provided the percentages were correct at the loan's inception.
B. The bank must check values every month to ensure that the percentages are correct at all times.
C. The bank must check values when the collateral is retired or amortized to make sure the collateral is replaced with securities that will bring the loan into compliance with the percentages required in the law.
D. The bank must annually check the value of the collateral to ensure that the percentage of value is maintained.
C
167
Which of the following is NOT a requirement of Regulation F?
A. Writing and maintaining policies and procedures for managing exposure to correspondent banks
B. Monitoring the exposure to correspondent banks on a regular basis
C. Establishing internal limits on exposure to correspondents
D. Providing quarterly reports to the board of directors of compliance audit results
D
168
Your institution has identified a deposit made by an existing depositor to an entity on the OFAC SDN list that should be blocked under OFAC requirements. The branch manager contacts you for specific instructions. Before reporting the transaction to OFAC, what should the bank do?
A. Reject the transaction
B. Process the transaction
C. Close the customer's account
D. Place the funds in an interest-bearing account
D
169
In evaluating investments under the CRA Investment Test, examiners would consider:
a. The bank's record of opening and closing branches
b. The innovativeness of the investment
c. The number of bank customers affected by the investment
d. The length of time the investment has been on the bank's books
B
170
James Walker DBA Walker Enterprises has been a customer of the bank for one month. The company told the bank that it would regularly make deposits in excess of $10,000 because it operates several laundromats in the city. The bank performed a background check on the company before opening the account. For its first 30 days, the company made 12 large cash deposits. Can the bank exempt this company now? Why or why not?
A. No. It is a not a corporation, but a sole proprietorship.
B. No. It has not maintained an account at the bank for 12 months.
C. No. It operates an ineligible business.
D. Yes. The bank conducted due diligence on the customer to determine that it had legitimate large cash transactions.
D
171
FinCEN is short for:
a. Financial CENter
b. Financial Crimes Enforcement Network
c. Financial Center and Enforcement Network
d. Foreign Intelligence and Central Enforcement Network
B
172
Which of the following relationships does NOT violate Regulation L?
Relationship A: First National Bank is located in the same city as an affiliate of First Savings and Loan. First National and the affiliate share a board member.
Relationship B: State Bank and an affiliate of First National Bank are located in the same RMSA . State Bank has assets of $60 million, and the affiliate has assets of $7 million. The two institutions share a board member.
Relationship C: Savings and Loan Association and Bank Holding Company do not have offices within the same RMSA. Bank Holding Companys assets are in excess of $1.75 billion, and Savings and Loan Associations assets are in excess of $2.5 billion. These institutions share a board member.
A. Relationship A
B. Relationship B
C. Relationship C
D. All the relationships violate Regulation L
B
173
First National Bank is a newly chartered bank. Which of the following security-related procedures is NOT required under the Bank Protection Act?
A. Appoint a security officer
B. Write a security program
C. Hire a security consultant to inspect the bank for the effectiveness of the bank's security devices
D. Write procedures to assist in preserving evidence of crimes
C
174
First National Bank receives a notice from the IRS to begin withholding 28 percent of the interest payments on the money market savings account of Myra Wilcox because of payee underreporting. What is the most proper action for First National Bank to take?
A. Send a notice to Ms. Wilcox within 15 days of the receipt of the IRS notice and begin withholding; stop withholding if Ms. Wilcox can prove to the bank that she is not underreporting
B. Begin withholding and send a notice to Ms. Wilcox within 15 days of beginning the withholding; stop withholding only on written notice from the IRS
C. Begin withholding with the first payment after 30 days and send a notice to Ms. Wilcox at least 15 days before the first payment from which funds are to be withheld; stop withholding only on written notice from the IRS
D. Send notice to Ms. Wilcox within 15 days of the receipt of the IRS notice and begin backup withholding with the first payment following 30 days after the notice; stop withholding only on written notice from the IRS
B
175
Which of the following is NOT a reason that the FRB will use to disapprove a reorganization plan?
A. To prevent unsafe or unsound practices
B. The lack of financial resources of the organization
C. Management's failure to submit a business plan
D. Management previous submission of an application for a mutual charter
D
176
Which of the following phrases, if stamped on a time deposit, is NOT effective to make the deposit nontransferable?
A. Not negotiable
B. Transferable only on the records of the bank
C. Transferable only with the permission of the bank
D. Not transferable
A
177
Which directly incurred costs are reimbursable to a bank for assembling or providing customer financial records to a government authority?
A. Internal Revenue Service summons
B. Document reproduction and shipping costs
C. Financial records relating to government loan programs
D. All financial records, whether identifiable to a particular customer or not
B
178
In which of the following situations is the bank NOT required to report lost or stolen securities?
A. When bonds were expected to be delivered in person from the local Federal Reserve Bank and were not received
B. When stock traded on the over-the-counter exchange (OTC) was expected to be received through the mail from a customer's broker
C. When securities with no CUSIP numbers were expected from another financial institution
D. When stock traded on the New York Stock Exchange (NYSE) was expected to be delivered by the issuer's agent
C
179
First National Bank would like to make a loan to an affiliate bank. Which of the following would NOT be acceptable as collateral for such a loan?
A. U.S. Treasury bills in an amount equal to the loan
B. Stock traded on the New York Stock Exchange that has a market value equal to 130 percent of the loan amount
C. An account for the benefit of First National held at the affiliate bank in an amount equal to the loan amount
D. Eligible bankers' acceptances with a market value equal to the loan amount
C
180
On foreclosure, which of the following loans is subject to the reporting requirements for foreclosed and abandoned property?
A. A loan made to purchase a family car, secured by the car
B. An unsecured loan made to purchase a computer used in the borrower's business
C. A loan made to purchase a residence, secured by the residence
D. A loan made to purchase a home computer, secured by the computer
C
181
When all the required information is NOT provided by a person purchasing a cashiers check with $8,000 in currency, what should the bank do?
A. Refuse the transaction
B. Complete the transaction and record available information
C. Complete the transaction and file a SAR
D. Complete the transaction and insist that the customer return with the required information
A
182
A bank has given a customer a merchandise gift with a fair market value of $25.00 for opening a deposit account. Which of the following statements describes the proper reporting status of this gift?
A. If the cost of the gift is under $20.00, it is not reportable to the IRS.
B. The cost of the gift is credited to the customer's account as a bonus, increasing the account balance.
C. The fair market value of the gift is reported to the customer on the periodic statement.
D. The fair market value of the gift is added to the interest paid and reported on Form 1099-INT.
D
183
ABC National Bank, an independent bank with $120 million in total assets located in a large urban area, is in the process of determining its option for its CRA evaluation. Which of the following options is NOT open to ABC Bank?
A. The small bank performance standard
B. The lending, investment, and service tests
C. The community development test
D. The strategic plan option
C
184
Which of the following is not exempt from the rules on reasonable and proportional pricing of electronic debit transactions?
A. A debit card issued by a community bank with $8 billion in assets
B. A debit card issued by the federal government for payment of benefits
C. A debit card issued by a community bank with $7 billion in assets, affiliated with another depository institution with assets of $5 billion
D. A prepaid card that cannot access a bank account
C
185
Assuming that the following are interest-bearing accounts at First National Bank and the SMDIA is $250,000:
Jim $300,000
Jim and Fred $180,000
Fred $350,000
Fred and Jim $160,000
Susan and Jim $200,000
How much of Jims money is covered by deposit insurance?
A. $500,000
B. $530,000
C. $570,000
D. $590,000
A
186
Bobs wife is HIV-positive due to a blood transfusion during an appendectomy 15 years ago. She is not yet sick, but takes medication to prevent the onset of AIDS. Bob occasionally needs to take time off from work to take her for testing at Johns Hopkins in Baltimore. Because of complaints about Bobs exposure to this disease, employees have asked HR to limit his contact with them and with customers. The bank has asked Bob not to eat in the lunchroom with the other employees and has placed Bob in a position where he has limited customer contact. Does this company have any potential ADA liability?
A. No. Bob's exposure to HIV could endanger other employees and customers
B. No. Because the hiring manager does not know that Bob actually has HIV or AIDS, there is no liability
C. Yes. Because the manager has associated Bob with this disease, the ''associated with'' rule applies
D. Yes. Because the manager has regarded Bob as having a disability, he has been ''regarded as'' disabled and the ADA applies
C
187
On which of the following loans must a bank maintain records under the Bank Secrecy Act?
A. All loans exceeding $5,000 and secured by real property
B. All loans exceeding $5,000, but not secured by real property
C. All loans exceeding $10,000 and secured by real property
D. All loans exceeding $10,000, but not secured by real property
D
188
Which of the following rate disclosure formats would be acceptable in an advertisement of First National Banks consumer certificate of deposit?
A. 1 percent annual percentage rate
B. 1.15 percent
C. 1.15 percent annual percentage yield
D. 1 percent interest rate
C
189
Which of the following statements is true?
A. A payment card network may require an issuer to agree that the issuer will only issue cards that are paid through the payment card network or one of its affiliates.
B. Payment card networks can restrict a merchant's ability to route electronic debit card transactions as long as they don't restrict it to less than two unaffiliated networks
C. If unaffiliated payment card networks merge, issuers have one year from the effective date of the merger to add an unaffiliated payment card network
D. An issuer can meet the requirements of the network exclusivity rule by allowing transactions to be processed on two unaffiliated payment card networks that don't restrict transactions based on geography, merchant or transaction type.
D
190
An officer at First National Bank has reason to believe that one of the banks customers may be involved in illegal activities for which funds are regularly deposited into the customers account. The officer does not know whether to notify the proper government agency or to notify the customer first. Under the Right to Financial Privacy Act what can the bank do?
A. The bank must notify the government agency, state that it has information concerning a possible violation of law, and provide the name and account number of the person involved.
B. The bank must notify the government agency that a possible crime has been committed and supply the customer's name, but it also must notify the customer at the same time.
C. The bank cannot notify the government agency until it notifies the customer and gives the customer a reasonable period of time to explain the account activity.
D. The bank must notify the government agency and supply all records that support its claim that a law was violated.
A
191
National Bank generally discloses information only to affiliated parties. However, in the following circumstances it will disclose information to nonaffiliated parties. It shares information with its service processor for the purpose of completing transactions. It sends details of loan transactions to its lawyers so that documentation can be drawn. It allows its external auditors to see transactions. From time to time for business development purposes, it shares full loan files with an affiliated finance company that is owned by its holding company. Does National have any responsibility to provide customers an opt-out option?
A. No. The bank shares only with affiliated parties except for the exemptions allowed by the privacy regulation.
B. Yes. Any information sharing requires an opt-out notice.
C. Yes. The loan transaction information given to the lawyers triggers the opt-out notice requirement.
D. Yes. The bank must give a Fair Credit Reporting Act opt-out for the information even for sharing with an affiliate.
D
192
Regulation II (Debit Card Interchange Fees and Routing Regulation) restrictions on interchange transaction fees does not apply to issuers that:
a. Together with affiliates, have assets of less than $10 billion
b. Have assets of $1 billion or less
c. Are part of a holding company that has total assets of less than $1 billion
d. Issue less than 5,000 debit cards
A
193
When may an automatically renewable time deposit account be considered for inclusion in the unclaimed property report?
A. When a customer has corresponded with the bank but not made deposits to the account
B. When a customer has shown interest in the account but not made deposits to the account
C. When a customer does not instruct the bank in writing to roll over the account
D. When the customer has not deposited or withdrawn funds from the account or another account at the same bank
D
194
A current member of the board of directors at First Savings Association (an institution with $150 million in total assets) was a director at First National Bank (an institution with total assets of $200 million) for many years. The two institutions are located in the same town. Before being elected to the board of First Savings, the director retired from the First National board. To honor his years of service with First National, the bank made him a director emeritus for life. He can attend any board meeting but cannot vote. He may speak to matters before the board and receives a directors fee. In actuality, however, the director never attends board meetings. Does this relationship violate Regulation L?
A. No, because he does not attend meetings.
B. No, because he cannot vote.
C. Yes, because he receives a fee.
D. Yes, because he is really an honorary director.
D
195
XYZ bank holding company is purchasing ABC Bank. ABC Bank will retain a separate charter. The compliance officer has been asked to develop a privacy policy and privacy notice for ABC Bank. What should the compliance officer do FIRST?
A. Identify all of the information-sharing practices between ABC Bank and third parties
B. Obtain a mailing list of ABC Bank's customers to ensure they receive a privacy notice
C. Ensure that all of ABC Bank's joint marketing agreements contain confidentiality clauses
D. Evaluate whether ABC Bank's systems can electronically support opt-out elections by customers
A
196
Records that must be retained for deposit accounts include which of the following?
A. Average daily balance
B. Overdraft history
C. All amounts of currency deposited or withdrawn
D. Customer's identity
D
197
Assuming that the following are interest-bearing accounts at First National Bank and the SMDIA is $250,000:
Jim $250,000
Jim and Fred $180,000
Fred $350,000
Fred and Jim $160,000
Susan and Jim $300,000
How much of Jims money is covered by deposit insurance?
A. $890,000
B. $640,000
C. $570,000
D. $500,000
D
198
In May, a compliance officer discovers that, despite two previous warning letters, Mr. Jones has written checks drawn on his money market deposit account eight times in February, seven times in March, and seven times in April. The MOST appropriate action for the bank to take at this time is to send Mr. Jones a letter. What should the letter state?
A. A service charge is being assessed for the excess transactions.
B. Another type of account may better meet his needs.
C. That he is approaching the transaction limitation on his money market account
D. That he has exceeded his transaction limit and that another occurrence within a rolling 12-month period will result in account conversion to a demand-deposit account or other transaction account for which he is eligible.
D
199
When an advertisement states the APY, what other disclosure does Regulation DD require?
A. Interest rate, using that terminology
B. Index for variable rate transactions
C. Minimum balance to obtain the stated APY
D. Advertisement inviting the reader to inquire about other features of the account
C
200
On which of the following loans does First Savings Bank NOT have to provide a 1098-E (Student Loan Interest) report?
A. A $10,000 tuition loan made to Bobby Wilcox, a student at the state university, guaranteed by the Department of Education
B. A $35,000 line of credit made to Don and Barbara Cocelli, secured by their home, for the payment of certified school expenses for their twin daughters at an accredited private school
C. A $15,000 loan to Linda Chu to be used for the purpose of paying tuition and fees and purchasing college books, lab equipment, and a computer for use in her education at the local community college
D. A $12,000 loan to Paul and Rhonda Pena and their daughter Jennifer, used to pay her college tuition as well as the tuition at the private high school her sister, Jeanne, attends
D
201
At which of the following locations may a collecting bank NOT present an item?
A. A place requested by the paying bank
B. A place requested by the nonbank payor if payable by the nonbank payor
C. Through a clearinghouse
D. Any bank for which presentment of the item would be convenient
D
202
Bob Jones, president of First National Bank, does not believe the bank has to do anything to comply with the FFIEC Interagency Guidance. The bank has an information-only Web site, does not offer any online Internet banking services, and only offers telephone banking at this time. Which of the following statements best describes the banks responsibility?
Statement 1: The bank does not offer any Internet banking services, so it does not need to worry about the Interagency Guidance at this time.
Statement 2: First National Bank should conduct a risk assessment on their telephone banking services. They should provide written support for the low risk and adequacy of single-factor authentication.
Statement 3: Telephone banking service offers only standard balance and transfer between accounts. No risk assessment is required.
Statement 4: The bank should have information on fraud and identity theft inserted on its Web site for customer awareness. Information should also be available in the bank lobby and should be evaluated periodically.
A. Statement 1 only
B. Statement 2 only
C. Statements 1 and 2
D. Statements 2 and 4
D
203
A routine review of account records reveals that suspicious activity involving foreign currency has occurred in the account of one of the banks directors. Which of the following actions should be taken FIRST?
A. A SAR should be filed.
B. The bank's board of directors should discuss the account activity without the affected director being present.
C. The bank's president should meet with the affected director to discuss the account activity.
D. The bank should file a CTR, checking the box that indicates the report is for suspicious activity.
A
204
According to the Right to Financial Privacy Act, when a call is received from the Social Security Administration requesting verification of whether an individual has an account at an institution in order to prevent a fraud from occurring, what should the employee taking the call do?
A. Refuse to answer because it would be a violation of the Right to Financial Privacy Act
B. Provide full information on the individual's account
C. Confirm the existence of the individual's account, but provide no further information
D. Tell the caller it is necessary to obtain the individual's written permission to provide any information
C
205
ACME Bank is reviewing its security program for safeguarding customer information. All but one of the following functions should be included in its review. Which one need NOT be included?
A. The bank's Internet Web site
B. The bank's loan operations back office where loan files are kept
C. The bank's system of disposing of its trash
D. The bank's printed marketing and promotional materials
D
206
According to federal regulations, what must a security officer do when establishing a bank security program?
A. Survey competitors' security procedures
B. Hire uniformed armed guards to monitor the bank lobby
C. Modify the cash vault to meet minimum wall thickness standards
D. Institute procedures for testing security devices periodically
D
207
First National Bank opened a letter of credit in favor of ABC Co., a U.S. company, for ABCs sale of goods to Country X, a foreign country that participates in a boycott. The letter of credit contains no boycott provisions, but First National Bank knows that ABC Co. has agreed to supply a certification to Country X that ABC has not dealt with any blacklisted firms as a condition of receiving the letter of credit in its favor. What should First National Bank do?
A. Implement the letter of credit because there is no boycott language on its face
B. Require ABC to indemnify the bank against any potential loss for participation in a boycott
C. Not implement the letter of credit
D. Have the letter of credit confirmed by a bank in Country X
C
208
What should a compliance manager do FIRST to implement the third-party joint marketing agreement as required by the Privacy of Consumer Financial Information regulations?
A. Notify the third party of the institution's opt-out policy
B. Obtain approval of the board of directors prior to entering into a third-party contract
C. Review the requirements for third-party joint marketing agreements and make certain the requirements are included
D. Request a written statement from the third-party provider that certifies compliance with the regulation
C
209
Martin Taylor, a loan officer at First National Bank, is a long-time friend of Bill Evans, a local homebuilder. Bill would like a line of credit at the bank and discusses the potential loan with Martin. During the discussion, Martin expresses his desire to build a house one day and Bill offers to build him one at cost plus 5 percent. If Martin accepts Bills offer, can he continue to act as his loan officer?
A. No. The value of the gift is too great.
B. Yes, if Martin discloses this fact to the bank.
C. Yes, if Martin does not let the discount on the house affect his decision-making process.
D. Yes, if the bank's code of conduct allows such activity.
A
210
Harvey Smith is a loan officer at First National Bank. Which of the following of Harveys outside business interests may be considered to be a conflict of interest that should be disclosed to the bank?
A. His ownership of 4,000 shares of stock in a local car dealership (the car dealership is not a bank customer)
B. His wife's position as chair of the board of a local bank
C. His attendance at a party hosted by one of his customers where other financial institutions were represented
D. His role as honorary chair of a fund drive for a local charitable organization
B
211
Revocable trust accounts are FDIC insured up to the standard maximum deposit insurance amount...
a. Per account
b. Per beneficiary
c. Per account owner
d. Per institution
B
212
For which of the following is a bank most likely to be in danger of receiving a cease and desist order?
A. Repetition in a BSA examination of a noncritical deficiency reported in a previous BSA examination
B. Failure to document AML training to its part-time clerical employees
C. A 2 percent error rate on the bank's CTRs
D. Failure to file suspicious activity reports
D
213
DEF Bank operates a general audience Web site with many pages describing its products and services. As a part of this Web site, it has a Kids Bank on one of the pages for the purpose of opening accounts for children. Where must the link to the banks disclosure of information-sharing practices with regard to children be displayed?
A. Only the bank's home page
B. Only on the Kid's Bank home page
C. On the bank's home page and the Kid's Bank home page
D. On every pageon of the Web site
B
214
The bank's compliance officer has been invited to speak at the ABA National Compliance Conference to a general session of compliance professionals. The ABA gives the compliance officer a thank you gift of a glass engraved bowl worth approximately $60. Does the compliance officer's acceptance of the gift constitute a violation of the Bank Bribery Act?
a. No, because the value of the gift is below the threshold permitted by the Act.
b. Yes, because the value of the gift is more than $50
c. Yes, if the Bank's Code of Conduct prohibits such gifts
d. No, because the gift is not given in connection with the loan decision process
C
215
Which of the following actions subjects a lender to mortgage interest reporting requirements?
A. The lender holds mortgage loans in the course of its trade or business.
B. The lender is a qualified FHA or VA lender.
C. The lender receives at least $500 in interest on a mortgage loan during a calendar year.
D. The lender offers unsecured home improvement loans.
A
216
Which of the following statements is true about a delineated CRA assessment area?
a. A bank can have only one CRA assessment area
b. The CRA assessment area is a separate performance criterion
c. The CRA assessment area mush consist of whole geographies
d. The CRA assessment area must be an equidistant circle area with the bank's main office at the center
C
217
Which of the following practices is authorized by the Federal Reserve Act?
A. An agreement by a bank that it is responsible for the obligations of its subsidiary
B. A bank's purchase, in its fiduciary capacity, of the affiliate's assets if the fiduciary instrument allows for such a purchase
C. The sale of a nonaccruing loan from a bank to its bank affiliate
D. The acceptance of an affiliate's securities of an affiliate as collateral for a bank's loan from the bank to the affiliate
B
218
In which of the following situations does a bank need to post a branch closing notice?
A. A bank closes a branch temporarily because of heavy hurricane damage.
B. A bank closes a branch in a suburban neighborhood because business has not adequately developed there.
C. A bank decides not to exercise its option to purchase a branch it has been temporarily running for the FDIC as a part of a purchase of a failed institution.
D. A bank closes a branch and moves it 850 feet down the street
B
219
ABC Bank failed with the following accounts for Natalie Nguyen on its books: A certificate of deposit in the name of Natalie Nguyen with a principal balance of $225,000 and accrued interest of $5,000 A savings account in the name of Natalie and her mother Sheila with a balance of $600,000 An IRA for the benefit of Natalie with a balance of $350,000 An account styled Natalie Nguyen payable on death to Monica Williams (Natalies best friend) with a balance of $200,000 If the SMDIA is $250,000, how much of Natalies money is insured?
A. $980,000
B. $930,000
C. $750,000
D. $830,000
B
220
The BSA officer has just been notified by the chief operations officer that, due to a glitch in the banks OFAC interdiction software, wires have been regularly transmitted to a bank on the SDN list. Based on the OFAC Enforcement Guidance, what should the BSA Officer do FIRST to attempt to mitigate any penalties?
A. Review the OFAC wire policies and procedures to determine how the errors occurred
B. Stop and hold all wires to the bank on the SDN list
C. Investigate the customer who sends these wires
D. Self-report the activity to OFAC
B
221
Walter Johnson has two accounts at First National Bank. His savings account was opened in 1975, and his money market savings account was opened in 1985. He has never supplied a TIN number to the bank. What must First National Bank do?
A. Withhold 28 percent of the payments on each of the accounts
B. Withhold 28 percent of the payments on each account and annually request a TIN on the savings account
C. Annually request a TIN on both accounts
D. Refuse to open future accounts without a TIN
B
222
Which of the following actions of Sales, Inc., a U.S. based corporation, appears to be illegal with NO affirmative defense available under the FCPA?
A. Sales, Inc. pays a fee to the government of a foreign country to obtain a sales and distribution license in the country
B. Sales, Inc. pays a commission to the chief customs officer of the foreign country based on the amount of gross sales each month
C. Sales, Inc. pays a fee that is authorized under the laws of the country, to the chief customs official of the foreign country for consulting with the company on compliance with the customs laws
D. Sales, Inc. pays a transportation tax to a foreign government official for the purpose of transporting its product throughout the country
B
223
Under Regulation GG, banks should:
a. Notify all consumer accountholders that internet gambling is prohibited under the Act
b. Identify all customers that conduct internet gambling and notify them of the Act's prohibitions
c. Provide a written notice to all commercial accountholders that their accounts may not be used for illegal internet gambling
d. Provide a written notice to all credit card accountholders informing them that they may not use their credit cards to conduct illegal gambling
C
224
Which of the following businesses would be eligible to be an exempt person under the requirements of the Bank Secrecy Act?
A. Jackson's Used Cars
B. Evanston Recreational Boats
C. Al Williams Seafood Restaurant
D. Goldsmith Aircraft Distributors
C
225
Of the following statements that describe the requirements of Regulation DD, which statement is true?
A. The act requires the bank to begin accruing interest on interest-bearing accounts no later than the second business day following the day of deposit.
B. The act requires the bank to compound interest no less than monthly.
C. The act requires the bank to send periodic statements on all accounts no less than quarterly.
D. The act requires the disclosure of all fees imposed during the statement period in connection with the account on any periodic statement.
D
226
First National Bank and Fidelity Bank are subsidiaries of Bank Holding Company, Inc. Fidelity is planning to sell First National two loan participations. It has been Fidelitys practice for several years to sell overlines to First National.
Loan A has been on Fidelitys books for two years. It is a line of credit that will be over Fidelitys loan limit with its next advance. It was recently classified as special mention during a safety and soundness examination. First National agreed to purchase overlines on Loan A before Fidelitys funding of the loan two years ago and signed a participation agreement at that time.
Loan B is 60 days past due for a principal payment, although interest payments are current. The loan has been on the books at Fidelity for one year. First National agreed to purchase overlines on Loan B six months ago.
Which, if any, of these loans can First National purchase?
A. Neither, both are low-quality assets
B. Loan A only
C. Loan B only
D. Both Loan A and Loan B
B
227
State National Bankﾒs security officer is preparing for the bankﾒs annual information security review. Which of the following steps is NOT required for this review? A. An intrusion test of the bank's online banking system B. An audit of the bank lobby during business hours to determine whether customer information is kept private C. A review of all contracts from service providers with access to bank customer information D. A review of all outside windows to check for physical security
D
228
Which of the following transactions requires completion of FinCEN Form 104, a CTR?
A. Deposit of checks totaling $12,000 to a checking account
B. Cash purchase of a cashier's check for $7,800
C. Cash withdrawal of $3,000 from a checking account
D. Cashing of a $14,000 check for a customer
D
229
Which of the following entities is exempt from the requirements of the Government Securities Act?
A. A bank that operates a securities underwriting department to provide underwriting services to issuers of government securities
B. A national bank that purchases and sells government securities only in its fiduciary capacity on behalf of clients in its trust department
C. A bank that operates a financial advisory service that provides advice to clients on the purchase and sale of government securities
D. A bank that operates an investment department to provide investment advice and purchase and sell all types of securities (including government securities) for clients
B
230
To which of the following potential customers would First National Bank have to make available a Regulation DD account disclosure?
A. National Lumber Company (a local corporation)
B. Rogers and Rogers (a law firm in the form of a partnership)
C. John Jones, DBA Jones Consulting Company (a sole proprietorship)
D. Eva Gilcrest, POD (payable on death) to Jane Gilcrest
D
231
Which of the following is NOT a requirement when a bank pays an employee a fee for referring a high-net-worth or institutional customer to a broker?
A. The bank must have a written agreement with the broker
B. The bank must give a disclosure to the customer
C. The bank must reasonably believe that the customer is a high net worth or institutional customer
D. The employee must be registered with the bank's regulatory agency
D
232
ACME Bank has a separate page on its Web site where it describes insurance products, such as life insurance and health and disability insurance. The page invites consumers to call the bank officer in charge of selling these products. The Web sites lending page also describes consumer loans and uses the following phrase: Have peace of mind credit life and disability insurance are available on all consumer loans to qualified borrowers. Neither the insurance page nor the lending page mentions insured deposits. What does ACME need to do to make sure its Web site is in compliance?
A. Nothing. As long as the insurance products are segregated, the Web site is in compliance.
B. Place the advertising disclosures (not a deposit, not insured by the FDIC, and so on) on the insurance page.
C. Place the advertising disclosures on both the Web site's insurance page and its lending page.
D. Create a separate Web site for all insurance products.
C
233
ABC Bank failed with the following accounts for Fred Jones on its books: A certificate of deposit in the name of Fred Jones with a principal balance of $250,000 and accrued interest of $6,250 An account for Fred Jones, for which Mr. Jones has now provided documentation showing that he opened the account as a payable-on-death account for his son; the account has a balance of $1,250,000 An IRA for the benefit of Fred Jones with a balance of $250,000 An account styled Fred Jones, trustee for Nancy Jones and Roger Wilson with a balance of $200,000; Nancy is Freds daughter, Roger is Freds brother If the SMDIA is $250,000, how much of Freds money is insured?
A. $950,000
B. $750,000
C. $700,000
D. $500,000
C
234
A federal government agency may obtain customer financial records from a financial institution immediately if it presents which of the following to the financial institution?
A. Written request
B. Valid search warrant
C. Certified bench warrant
D. IRS administrative letter
B
235
Which of the following is the best method for a large bank to use in monitoring its CRA performance?
A. Review the effectiveness of marketing materials.
B. Evaluate approval and denial rates for minority loan applicants.
C. Perform a quarterly evaluation of the bank's loans-to-deposits ratio.
D. Perform a geographic analysis of lending levels and dispersion of loans.
D
236
A savings and loan holding company that received approval to acquire a savings association in 1986 is grandfathered for purposes of the permissible activities as long as:
A. The savings association remains under $500 million in assets
B. All of the subsidiaries of the savings and loan holding company remain under $5 billion in assets
C. The savings association does not increase its number of locations
D. The savings association does not move any branches to a different location
C
237
First National Bank is a municipal securities dealer. Its municipal securities department is supervised by Mary Watkins, a municipal securities principal. The department has five other employees, including two municipal securities representatives. Martin Wells, a commercial loan customer of the bank, tells Ms. Watkins he wants to invest in municipal securities and asks for her help. Mr. Wells has never dealt with the municipal securities department of the bank and has never purchased municipal securities. He wants to purchase the securities today. What should Ms. Watkins do?
A. Determine what he would like to buy and help him buy it
B. Help him make the purchase only if she can be assured the transaction meets the MSRB suitability requirements
C. Help him make the purchase but avoid making any recommendations or comments about the advisability of the transaction
D. Refer him to a municipal securities representative
B
238
Which of the following is NOT a requirement of the Interagency Statement on Retail Sales of Nondeposit Investments?
A. That employees selling nondeposit investments receive special training on the products they sell
B. That all bank employees receive special training on the nondeposit investment products sold by the bank
C. That employees selling nondeposit investments ensure that the product is suitable to the customer purchasing it
D. That the history of employees selling nondeposit investments be checked before their employment
B
239
First National Bank owns a data processing company that sells financially related data processing services to various businesses in the community. Daniel Tyler, a loan officer, is negotiating a loan to a local CPA firm. He would like to make the loan conditional on the CPA firms use of the subsidiary data processing firm. May he do so?
A. Yes, because it is not a bank service.
B. Yes, because it is not related to pricing.
C. No. It is an illegal tie-in.
D. No, unless the company was planning to obtain a new data processing service provider anyway.
C
240
When is it possible for a bank to be exempted from compliance with some of the Government Securities Act custodial regulations?
A. When the bank maintains its securities in the ordinary course of business
B. When the bank has procedures in place to make sure it complies with the custodial regulations of its federal regulatory agency
C. When the bank does not hold itself out as a government securities broker or dealer
D. When the bank uses more than the normal standard of care when maintaining possession and control of securities
B
241
A recent compliance review revealed that several branch officers are using obsolete loan application forms, which do not include disclosures related to credit insurance sales. Which of the following steps should be taken FIRST?
A. Determine which customers were affected and take corrective action.
B. Contact the bank's primary regulator to determine the best course of action.
C. Instruct the branch to destroy all obsolete forms and immediately begin using the current versions.
D. Determine whether the branches use a separate document for required credit insurance sales disclosure.
D
242
A national bank may make a loan to an affiliated mortgage company that is 100 percent owned by the same bank holding company, if the aggregate amount of all covered transactions of the national bank and its subsidiaries does not exceed a certain percentage of capital and surplus of the national bank. What is that percentage?
A. 10 percent
B. 15 percent
C. 20 percent
D. 25 percent
C
243
Of the following practices, which one is NOT accepted in insurance and annuity sales?
A. Reviewing insurance company ratings
B. Monitoring customer complaints against insurance companies
C. Verifying that personnel are properly licensed
D. Churning accounts
D
244
Which of the following actions is NOT required of a municipal securities principal?
A. Pass the Municipal Securities Principal Qualification Examination
B. Complete Form MSD-4 and submit it to the bank
C. Work as an apprentice for one year in a municipal securities operation
D. Work in a supervisory role in a municipal securities operation
C
245
A bank received a signed letter criticizing its performance in meeting the credit needs of the community, but not adversely reflecting upon any individual bank employeeﾒs reputation. What must the bank do with this letter? A. Have it reviewed and discussed by the board of directors B. File it with the regional office of the bank's federal regulator C. Retain it in the CRA public comment file D. Answer it within 10 business days
C
246
What are holders of unclaimed property required to do?
A. Mail a notification to customers whose accounts may escheat to the state
B. Charge customers ''inactive/unclaimed'' fees for accounts that are dormant
C. Publish in a local paper the owners' names of accounts that will escheat
D. Discontinue paying interest on dormant accounts
A
247
Which of the following is NOT a permissible activity for a savings and loan holding company?
A. Offer tax and accounting services to small businesses
B. Acquire and develop residential real estate
C. Underwrite credit life insurance
D. Manage improved real estate projects
A
248
What duty does a business associate have if it experiences a breach in security related to medical information?
A. Notify the state attorney general's office
B. Notify the individuals whose information could have been disclosed
C. Notify the covered entity who provided the information
D. Notify HHS
C
249
Which of the following sets of policies or procedures is NOT a requirement of a security program?
A. Policies addressing what to do in case of a robbery
B. Procedures for opening the bank at the beginning of the day
C. Procedures for keeping customer information private
D. Policies addressing periodic reporting to the board of directors
C
250
Assuming that the following are interest-bearing accounts at First National Bank and the SMDIA is $250,000:
Jim $300,000
Jim and Fred $180,000
Fred $350,000
Fred and Jim $160,000
Susan and Jim $200,000
How much of Freds money is covered by deposit insurance?
A. $520,000
B. $420,000
C. $350,000
D. $170,000
B
251
Which of the following is NOT considered an acceptable form of identification for an individual when completing a CTR?
A. U.S. passport
B. Long-term deposit account relationship
C. State-issued photo identification (e.g., driver's license)
D. Photo identification card issued by a local government agency
B
252
QRS State Bank is being examined under the lending test. Which of the following is the most relevant criteria for the lending test?
A. The distribution of the bank's small business loans
B. The racial and gender characteristics of QRS's lending staff
C. The location of QRS's branches
D. The services QRS offers to its community
A
253
Bank B is a correspondent of Bank A. Which of the following must be included in Bank As calculation of credit exposure to Bank B?
A. A loan to Mr. Pierce from Bank A secured by Bank B common stock
B. Bank B's purchase of U.S. government T-Bills on behalf of Bank A under an overnight repurchase arrangement
C. Bank A's deposit account of $1 million in Bank B
D. A letter of credit issued by Bank B and pledged against the ACME Company's debt at Bank A
C
254
A bank received a search warrant from the FBI for financial records relating to a customer. Initially what is the BEST way for the bank to handle the search warrant?
A. Immediately reject it and return it to the FBI
B. Mail a copy of the search warrant with the notice prescribed by the Right to Financial Privacy Act to the customer within 90 days
C. Obtain a written certification from the FBI that it has complied with the Right to Financial Privacy Act
D. Assemble the requested records and mail them to the bank's primary supervisory agency, which will determine whether the records can be released to the FBI
C
255
In evaluating a banks CRA performance, to what do bank examiners give the greatest consideration?
A. Efforts to analyze the geographic origins of its deposit base
B. Efforts to establish communication with members of the community regarding credit needs
C. Participation of the bank's board of directors in formulating CRA policy
D. Extensions of credit the bank has made where the financing benefits low- and moderate-income borrowers or neighborhoods
D
256
Which of the following pieces of information is the bank NOT required to report on Form 1099 for foreclosed and abandoned property?
A. The name, address, and TIN of the borrowers
B. A description of the property
C. The original loan amount
D. Whether the borrower is personally liable for the debt
C
257
When designating its CRA assessment area, a bank should:
a. Draw an equidistant circle around the bank's main office large enough to include all branches
b. Designate a separate assessment area for each bank office
c. Include at least 80% of the bank's loan customers in the assessment area
d. Include the geographies in which the bank has its main office, branches, and deposit-taking ATMs and surrounding areas where the bank has originated a substantial portion of its loans
D
258
First National Bank, a U.S. bank, is contacted by Manufacturing Company, Inc., a U.S. company, to finance its transaction with Country Z, a boycotting country. Payment will be made through a letter of credit in favor of Manufacturing Company at its U.S. address. First National Bank knows that the letter of credit will contain restrictive boycott conditions that would prevent the bank from implementing it. First National Bank suggests to Manufacturing Company, Inc., that it set up a shell corporation in Country Y, a nonboycotting country, and have the shell corporation be the beneficiary of the letter of credit. Does First National Bank have any problem with this transaction?
A. No. The transaction is now not subject to Department of Commerce regulations because the beneficiary is not a U.S. company.
B. Yes. The transaction is set up to evade the regulation and First National Bank is liable.
C. No. The transaction is set up to evade the regulation, but First National Bank is not liable because Manufacturing Company, Inc., actually effected the transaction.
D. No. First National should have Manufacturing Company, Inc., sign a statement accepting full responsibility for the establishment of the shell corporation.
B
259
Roger Jameson is the head of the consumer loan department at First National Bank. He is a regular participant in a lending committee of a local finance trade association. The committee meets once a month at a local hotel. After the committee meetings, Roger and several other committee members who are officers at other banks in town go to a hotel restaurant and talk for a couple of hours before leaving. During these informal conversations Roger learned that the other members require the car dealerships in town that sell consumer installment contracts to the banks to refrain from selling them to local savings and loan associations. Roger believes that this is a good idea and would like to implement it at First National. Is there a problem with doing so?
A. No, because interest rates are not involved.
B. No, because this decision would have no effect on the cost to the consumer.
C. Yes, unless there are enough dealerships in town to provide contracts to all of the institutions.
D. Yes. Restricting the dealerships is a restraint of trade.
D
260
Which of the following banks CANNOT select Montana as its home state for deposit production purposes?
A. ABC National Bank with its headquarters in Missoula, Montana
B. XYZ State Bank, with a Montana state charter
C. ACME National Bank with its headquarters in Minneapolis, MN, but with most of its branches and the majority of its loans in Montana
D. Friendly Bank, a U.S. branch of a foreign bank with two U.S. locations, one in Montana and one in Wyoming
C
261
First National Bank's website displays information about its consumer savings and checking account products. The deposit product page has a link to a rate table that lists the current APY for each type of account. Which of the following additional disclosures would be required with the rate table?
a. Minimum balance required to earn the APY
b. Corresponding simple interest rate
c. Statement of whether or not accrued interest will be paid if account closes before maturity
d. Maximum balance amount permitted for each account
A
262
Which of the following is not subject to the FCPA?
A. A U.S. corporation
B. An Asian corporation with offices throughout the world, including in the U.S.
C. An European corporation with offices only in Europe
D. An employee of a U.S. corporation
C
263
A bank has been criticized by an examiner for less than satisfactory CRA performance. The bank must show improvement in its commitment to CRA. For the examiner, what would be LEAST effective in demonstrating the change?
A. Informing the examiner that the bank does not plan to acquire or merge with another bank, so CRA is not a priority
B. Giving the examiner an updated CRA public file
C. Showing the examiner a list of community groups with which the bank has met in the past 24 months to discuss credit needs
D. Showing the examiner results of the bank's most recent geocoding analysis, indicating parity in the number of loans made in each census tract
A
264
When it returns a check to the Federal Reserve, for which of the following may a returning bank NOT warrant?
A. The presenting bank's endorsement
B. The check is being returned within the time deadlines
C. The bank is authorized to return the check
D. The check has not been altered
A
265
A bank is conducting due diligence for a foreign correspondent bank account. Which of the following is NOT required information?
A. The identities of the correspondent bank's true ownership
B. Information on the government licenses of the correspondent bank
C. Copies of the tax return of the correspondent bank
D. Information on the products and services the correspondent bank offers
C
266
For purposes of FDIC insurance, negotiable CDs are:
a. not covered by FDIC insurance
b. insured for the current owner of the CD
c. insured for the person who purchased the CD, per the institution's records
d. treated as a revocable trust account for FDIC insurance purposes
B
267
State National Bank operates an informational Web site. The site has descriptions of all the bankﾒs accounts, including its childrenﾒs savings account. The account is simply listed along with all other accounts; the bank makes no attempt to market the account to children on the Web site itself. The bank does not open accounts online, but the Web site does have an online reply form that consumers can use to request account-opening documents. State Nationalﾒs procedures require minors to open accounts in person. The bank does not intend for children to send in any information via its Web site. However, it is possible for a child to request account-opening documents through the reply form. What is State National required to do to comply with COPPA? A. Post the children's privacy disclosures and fulfill the parental notice requirements B. Nothing, because there is no intent on the bank's part to obtain children's information C. Post a notice on the reply form that the bank will not accept requests from persons under 18 years of age D. Delete the children's savings account information from the Web site
C
268
A municipal securities principal must directly supervise municipal securities operations. This includes reviewing all but one of the following. Which task is NOT involved in directly supervising municipal securities operations?
A. Opening the customer's account
B. Providing quotations to customers
C. Handling customer complaints
D. Handling a municipal securities transaction
B
269
Which of the following geographic factors would most likely impact your bank's BSA/AML risk assessment?
a. The fact that the bank is located in a low-to-moderate income census tract
b. The fact that the bank is located in a High Intensity Drug Trafficking Area (HIDTA)
c. The fact that the bank is located in a large metropolitan city
d. The fact that the bank is located in a census tract with a significant Hispanic population
B
270
A banking agency is conducting a credit needs determination. Which of the following is NOT a criterion used in such a determination?
A. The bank's CRA rating
B. Economic conditions, including loan demand in the bank's communities
C. Whether the bank was once part of a failed institution
D. The bank's profitability ratios
D
271
In cases of a judicial subpoena, administrative subpoena, and formal written request, how long after mailing the customer notice must the government agency wait before proceeding to obtain the records?
A. 14 days
B. 20 days
C. 30 days
D. 15 days
A
272
When an organization reorganizes into a federal mutual holding company, it must:
A. Give its members the same rights as immediately prior to the organization
B. Confer upon its members a share of the savings association for every holding company share
C. Agree to buy out minority shareholders that do not approve the reorganization
D. Deposit funds into an escrow account to pay off the shares of minority shareholders
A
273
Which of the following customers may be exempted under Phase II of the Bank Secrecy Act?
A. Government agencies
B. Correspondent banks
C. Payroll customers
D. Businesses whose stocks are traded on a national stock exchange
C
274
Mrs. Franklin has two mortgage loans at First National Bank on which she makes monthly payments. On Loan A she made 13 payments last year, mailing the last payment on December 28. It was received the afternoon of January 2 and credited on January 3. The amount of interest paid on Loan A in the first 12 payments was $1,000. There was $155 of interest on the 13th payment. On Loan B, she made 12 payments; each contained interest accrued to the fourth day of the month. The last payment was mailed on December 19 and was received and credited on December 23. The last payment contained interest accrued to January 4. The total interest paid on Loan B was $2,000, of which $100 accrued between January 1 and January 4 of the next year. How much interest must First National Bank report?
A. $1,155 for Loan A and $2,000 for Loan B
B. $1,155 for Loan A and $2,100 for Loan B
C. $1,000 for Loan A and $2,000 for Loan B
D. $1,000 for Loan A and $2,100 for Loan B
C
275
Which of the following actions is NOT a custodial requirement of the Government Securities Act?
A. Keeping possessory government securities in a vault with dual control access
B. Segregating government securities from bank assets
C. Keeping government securities free of liens, claims, and charges.
D. Issuing safekeeping receipts for securities
A
276
Acme Bank offers its customers Internet banking that includes bill payment services, wire transfer initiation, and access to customer account history. Acme has had to spend a substantial amount of money implementing a multifactor authentication system that will continue to be fairly expensive to operate. Which of the following is the best alternative for Acme that will allow the bank to be in compliance with the FFIEIC guidance?
A. The bank could provide the multifactor authentication to all customers who use the Internet banking services
B. The bank could discontinue offering Internet banking to its customers
C. The bank could ask its customers to choose which type of authentication they will use, and disclose the risks involved if the customer decides not to use multifactor methods
D. The bank could restructure its Internet banking product to restrict customer account information and allow transfers only to other accounts owned by the customer
A
277
In which of the following circumstances is First National Bank MOST LIKELY to be covered by the HITECH regulations?
A. The bank opens a payroll account for a local hospital
B. The bank processes a lock box account for a medical clinic primarily consisting of patient payments
C. The bank makes a loan to a group of doctors to purchase office equipment, secured by the equipment
D. A medical equipment vendor opens a checking account at the bank
B
278
Which of the following best describes who is subject to OFAC regulations?
a. All U.S. Persons
b. Federally chartered U.S. banks and bank holding companies
c. All financial institutions operating in the U.S.
d. Federally and state chartered banks and credit unions
A
279
In the small bank performance standard, which of the following is NOT a criterion?
A. The bank's CRA strategic plan
B. The bank's loan-to-deposit ratio
C. The geographic distribution of loans
D. The percentage of loans within the bank's assessment area(s)
A
280
What should a banks Bank Secrecy Act compliance program include?
A. All lobby notice requirements
B. The one-year record retention requirements
C. Designation of individuals responsible for day-to-day compliance
D. A list of types of loans covered by the Act
C
281
What is a key risk mitigation technique when offering RDC options to customers?
A. Risk Assessment
B. Customer Due Diligence
C. Contracts & Agreements
D. Vendor Due Diligence
B
282
Consider the following deposit balance information:
Ann Jones $150,000
Ann Jones $250,000
Jim Smith and Ann Jones $250,000
Jim Smith $175,000
Ann Jones: Agent for Jim Smith $475,000
Ann Jones and Jim Smith $300,000
TOTAL $1,600,000
How much of the $1,600,000 is FDIC insured if the SMDIA is $250,000?
A. $725,000
B. $750,000
C. $1,000,000
D. $1,600,000
C
283
ABC Co. signed a contract to export goods to Country M, a boycotting country. Payment will be made by a letter of credit confirmed by First National Bank. The letter of credit requires ABC Co. to certify that none of its directors are nationals of any country boycotted by Country M before ABC can be paid. First National Bank confirms the letter of credit to ABC after determining that all of the documents are in order. Did First National Bank participate in a boycott, and must the bank report the action to the IRS?
A. No. The bank's action was only ministerial.
B. Yes. The action was participation in a boycott and the bank must report the action to the IRS.
C. No. Only ABC Co. is required to report to the IRS.
D. Yes, but no reporting requirements were triggered.
B
284
First National Bank offers a money market account that has a $500 minimum balance and offers tiered interest rates that begin at .75 percent and progress to 1.5 percent, depending on the minimum balance each month. The account has a transaction fee of $5 per month, charged only if the average balance drops below the $500 minimum during the month. If the balance stays above this amount, the customer pays no fee. Which of the following is permissible in an advertisement for the account?
A. Interest rate: 1.25 percent; annual percentage yield: 1.5 percent
B. $500 minimum balance required
C. Free money market checking
D. 1.25 percent interest
B
285
What is the primary operational risk factor in the RDC delivery channel?
A. Fraud
B. Regulatory
C. Information Security
D. Vendor Management
A
286
First National Bank receives an order from a federal court to supply financial information pursuant to a request from the U.S. Attorney. The request is made pursuant to the Federal Rules of Civil Procedure in connection with a lawsuit involving the Federal Aviation Administration and a customer of the bank. The bank hires an attorney to review the order and to advise the bank of its liability for various courses of action. The bank pays the attorney $1,500. The bank spends 50 employee hours to retrieve in-house records and charges the government $22 per hour. The bank also makes 450 photocopies at a professional copy company at $0.20 per copy. Which costs incurred by the bank are reimbursable?
A. The hourly employee expense at $22 per hour and the photocopying expense are reimbursable to the bank.
B. None of the expenses is reimbursable.
C. All of the expenses are reimbursable.
D. Except for the attorney's fees, the expenses incurred by the bank are reimbursable.
B
287
Williams National Bank has its home office in New York State; however, it has branches in Nebraska. The federal banking agencies most recent host state loan-to-deposit publication lists the loan-to-deposit ratio for Nebraska as 78 percent. For Williams Bank to pass the loan-to-deposit screen of the Reigle-Neal Act, what must its loan-to-deposit ratio be for Nebraska?
A. At least 78 percent
B. At least 50 percent
C. At least 39 percent
D. At least 25 percent
C
288
An individual comes into the bank and makes a $6,000 cash deposit into a checking account. At the same time, the individual buys a $7,000 cashierﾒs check with cash. According to the Bank Secrecy Act, what is the bank is required to do? A. File a SAR for $13,000 B. File a CTR for the $6,000 cash deposit C. Aggregate the transactions and retain information about the purchase of the cashier's check D. Obtain the recordkeeping information for the purchase of the cashier's check and complete a CTR for the total cash-in transaction of $13,000
D
289
Which of the following activities is exempt from the prohibition against engaging in unrelated business activities?
A. Engaging in an escrow operation
B. Operating a title company
C. Operating an advertising agency
D. Engaging in general business consulting
A
290
Mills Company, Inc., is a manufacturing company with a working capital line of credit from First National Bank. The credit agreement governing the loan states that Mills cannot obtain additional unsecured credit without the approval of the bank. Mills believes that such a clause violates the Bank Holding Company Acts anti-tying clause. Does it?
A. Yes. It is a restraint of trade.
B. Yes, unless the bank will reasonably allow additional credit at Mills's request.
C. No, since this clause relates to the soundness of the credit
D. No, unless the bank refuses to grant additional credit to Mills itself
C
291
ABC Bank hired Acme Marketing Company to conduct telemarketing calls on its behalf. The bank asked Acme to market its various deposit account services. Which of the following statements is FALSE?
A. Acme can call any of the bank's current customers without their consent.
B. Acme must check the FTC Do-Not-Call list before calling the bank's current customers.
C. Acme must follow the abandonment rules on every call it makes for the bank.
D. Acme must maintain records of its employees who make the calls.
B
292
Which account is NOT subject to backup withholding?
A. A money market savings account owned by Brenda Wilson
B. A time deposit account owned by Bob and Nancy Dawson
C. An IRA owned by Max Jones
D. A savings account owned by Karen Hitchings
C
293
When conducting a records search pursuant to a FinCEN request, what must a bank search?
A. All customer records from the previous five years
B. All accounts maintained within the previous 12 months and transaction records for 6 months
C. Only records that can be electronically searched
D. Nothing; searches are voluntary
B
294
Which one of the following items is NOT eligible as a form of reserves?
A. Vault cash
B. Balance maintained with the Federal Reserve Bank
C. Pass-through account maintained at a member bank
D. Government securities
D
295
Which of the following loans is clearly NOT subject to the IRS mortgage interest reporting requirement?
A. A loan made to purchase securities, secured by rural acreage
B. A loan made to finance a college education, secured by a piece of commercial real estate
C. A loan made to purchase a lot on a lake, secured by a certificate of deposit
D. A loan made to purchase a residence, secured by the dwelling
C
296
It is the policy of First Safe Bank to offer credit life insurance and accident and disability insurance to all consumer loan customers. What procedures fulfill the disclosure requirements for the bank?
A. Place a sign on loan officers' desks that provides the disclosures and give each customer a written disclosure at loan closing.
B. Give each customer the disclosures orally at the time of application and in writing at loan closing.
C. Only a written disclosure at closing is necessary.
D. Only give disclosures to persons who actually purchase the insurance.
B
297
Big Nationwide Bank has decided to close one of its smaller branches in Texas. A community association from the small town where the branch is located is not pleased with the decision because Big Nationwides branch is the only financial institution in the small town. The community group complains to the federal agency that regulates Big Nationwide. What must Big Nationwide do in light of this protest against its decision to close the branch?
A. Re-post the notice and wait an additional 90 days
B. Send the federal agency a detailed statistical analysis that is consistent with its branch closing policy and that proves why closing the branch is economically necessary
C. Meet with the community group, explain their reasoning, and help the group find some alternative financial services
D. Nothing is required
D
