CRCM
Under the banks Funds Availability Policy, funds are generally given next day availability. However, the bank discloses that it will also hold funds on a case-by-case basis and under certain exceptions as permitted by law. A check for $2,000 is deposited on Monday, July 6, 2015. A decision is made to place a hold on the check due to the fact that there are alterations on it. It is drawn on an out-of-state company. When should funds be made available to the depositor?
$2,000 by July 13th
When conducting an audit of IRS tax compliance procedures, you should select a sample of which of the following forms?
1099A
When your bank receives a garnishment order for an account that potentially contains federal benefit payments, how long of a lookback period is the bank required to check the account for covered benefit payments?
2 months
The marketing officer requests your review of a savings account proposal. Savings accounts currently pay .5% interest, compounded daily. She proposes that the compounding basis be changed to quarterly. This will result in significant savings to the bank, with little customer attrition. In reviewing the current savings brochure provided to customers, you note the brochure states that the rate will compound daily. It also states that the bank reserves the right to require a 30-day notice prior to a withdrawal from a savings account. The bank has never exercised this right and there are currently no plans to do so. The brochure further states that the bank reserves the right to amend deposit contract terms by providing 21-day advance notice to the depositor. State laws are silent with respect to changes on deposit accounts. Which of the following describes the correct number of days of advance notice of an adverse change to affected deposit account holders, and the governing document or regulation, respectively? _________ Number of Days _________ Governed by
30, Regulation DD
A recent Homeowner's Protection Act (HPA) audit revealed that your bank releases a borrower from PMI coverage only when the borrower requests the release. After correcting your policies and procedures, your bank should NEXT drop PMI coverage for all eligible loans covered by HPA where the LTV has reached _____.
78%
In which of the following situations is a bank required by federal regulation to verify and record the identity of the customer and provide that, and other specific information, only upon request from the IRS?
A customer uses cash to purchase traveler's checks totaling $2,000 and, at the same time, uses cash to purchase a cashier's check for $3,000.
The Loan Department received a written complaint from a mortgage loan customer alleging that the bank has made a number of errors in timely crediting loan payments to the borrowers mortgage loan account. To comply with the RESPA mortgage servicing requirements, the bank must FIRST:
Acknowledge receipt of the complaint in writing within 5 business days
A financial institution plans to introduce a new package of services that will include deposit accounts, investment services, credit products, and electronic banking. You are included on the project committee to develop and implement this package. Which of the following is the MOST appropriate role for you, as the compliance officer, on this committee?
Advising the committee on disclosure requirements, regulatory limitations, and liability provisions affecting the package
Which of the following types of collateral is EXEMPT from flood insurance regulations?
Agricultural land that includes gas or liquid storage tanks
Which of the following represents the required method for providing a consumer with the insurance consumer protection disclosures in connection with a loan transaction?
At the time of loan application
Your bank is considering closing a branch office. You should review which of the following FIRST?
Bank's branch closing policy and procedures
In an audit of the institutions adjustable rate mortgage loan portfolio you should test for:
CHARM Booklets provided to all applicants at the time an application form is provided or before a nonrefundable fee is paid, whichever is earlier
The compliance manager's bank has a corporate initiative to acquire three financial institutions during the next two years. The recently completed regulatory examination included National Flood Disaster Protection Act violations, reimbursable violations of the Truth-in-Lending Act, a ''needs to improve'' rating under CRA, and violations for improperly completing hold notices under Regulation CC. On which of the following violations should the compliance manager focus FIRST?
CRA
Which one of the following policies would be prohibited under the Americans with Disabilities Act?
Charging employees who use service animals at work a reasonable fee to cover carpet cleaning
The bank's insurance representatives take applications in person and by telephone. Which of the following monitoring procedures is MOST effective for ensuring disclosure compliance when applications are taken by telephone?
Compare the date that a written disclosure was mailed to the customer with the date of the telephone conversation.
A review of the bank's deposit accounts reveals that ABC Widget Manufacturing Company, Inc. has recently opened a NOW account. Which of the following actions is MOST appropriate for the bank to take?
Convert the NOW account to a non-interest bearing account and discuss other options with the customer.
When reviewing exemptions for continued eligibility under the Bank Secrecy Act, a review of which of the following is LEAST helpful?
Currency Transaction Reports (CTRs)
Which of the following procedures would be MOST effective in controlling the flow of information from the bank to the government in conjunction with SAR filing?
Designate one department, such as Legal or Security, to process, review, and file SARs on behalf of the bank.
Which of the following procedures BEST determines whether a bank is in compliance with IRS regulations regarding deposit accounts?
Determination of whether TINs are properly requested for all new accounts opened
To determine whether your bank is a small servicer under Regulation Zs definition of small servicer and thereby exempt from RESPA requirements for early intervention mortgage servicing notices, you should:
Determine the number of mortgage loans your banks services together with any affiliates as of the current date
Your examiner tells you that your bank is straining its resources by not exempting any of its commercial account holders from CTR filing. The examiner notes that many of these customers are publicly traded and could be exempted. Which of the following actions is in the bank's BEST interest?
Determine whether granting exemptions is a manageable risk for the bank.
You have learned that the Federal Reserve has issued a proposed regulation to implement a recently enacted federal law. The proposal would have a significant adverse impact on one of the financial institution's existing activities. You have prepared a summary of the proposal for management. Which of the following actions is MOST appropriate for you to take?
Distribute the summary and advise that the financial institution may send a comment letter.
A bank has a large mortgage department as well as a high HMDA error rate. An expensive software program could automate the process, but the business unit manager does not want to purchase the software because of its expense. Though it is not as efficient, the manager prefers to make some improvements to the manual process, add some more robust monitoring procedures, and opt not to purchase the software. What should the compliance professional do?
Document the fact that the level of risk present with manual systems is acceptable to the mortgage department business unit
A good customer complaint management program should include all of the following EXCEPT:
Evaluation of the customer racial and ethnic characteristics
Legislation was recently enacted to reform consumer real estate protection laws, and the bank will now have to change the way it documents, discloses, and advertises real estate loans, an integral product line at your bank. What should the compliance professional do FIRST to implement the new law within the bank?
Form a task force of the business unit managers whose departments will be affected by the law to collectively form an action plan
Which of the following disclosures must be provided in writing at the time a variable rate deposit account is opened?
Frequency of potential rate changes
When making its modified LAR available to the public, a financial institution must include which of the following?
Gross annual income
National Bank is headquartered in Colorado and has branches in Nebraska and Wyoming that it acquired two years ago. Each year the federal regulatory agencies publish the host state loan-to-deposit ratios for each state, which are used to determine if banks with interstate branches are in compliance with the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994. To comply with the Act, the National Bank must:
Have a loan-to-deposit ratio in each state that equals or exceeds 50% of the loan-to-deposit ratio of each host state
You are concerned that the bank is disbursing funds before the right-of-rescission period has expired. Which of the following BEST describes the types of loans that you should examine for compliance?
Home equity and ARM second mortgages
Your bank was criticized in an examination because it did not have an Identity Theft Red Flags Program in place in accordance with the Fair Credit Reporting Act (Regulation V). What is the FIRST step you should take to initiate such a program?
Identify all the types of covered accounts the bank offers
Which of the following should the compliance officer accomplish FIRST to implement the information sharing provisions of the Fair Credit Reporting Act?
Identify the institution's affiliates
The bank is beginning e-banking and wants to deliver a full range of consumer electronic services. The compliance manager is a member of the project team. Which of the following functions is MOST appropriate for the compliance manager during the INITIAL stages of this project?
Identifying the consumer protection regulatory provisions on liability and error resolution
The job responsibilities of a newly hired compliance officer include review of all bank advertising. This review has never been done before. Which of the following actions is MOST appropriate for the new compliance officer to take FIRST?
Inform the Marketing Department that all current and future advertising material will be reviewed by the Compliance Office prior to publication.
Your bank is in acquisition mode and you have been asked to provide a list of items you would like to review from the targeted bank. In order to minimize impact to the targeted bank, you have been asked to include only critical items that could impact the sale or its price. Which of the following items is MOST important to consider?
Internal monitoring audits
A borrower, whose loan is subject to flood insurance because the collateral is located in a Special Flood Hazard Area as determined by the banks flood service provider, refuses to obtain and pay for flood insurance. The borrower claims that although the building is located in a SFHA, the building is above the base flood elevation and therefore, not subject to flood insurance. What should/could the bank do on this loan?
Let the borrower know that he could request a Letter of Map Amendment from FEMA to remove the property from the SFHA
Which of the following is considered a non-listed business that is eligible for exemption from CTR reporting requirements?
Licensed pari-mutual race track
Which of the following types of customers are NOT eligible to have a NOW account?
Limited Liability Corporation
Under CRA rules, banks other than small banks must report which of the following types of loans?
Loans to small farms
You learn that your bank has created a report of all deposit and loan customers. Presumed gender and ethnicity for each customer has been assigned based on customer first and/or last names. You should tell management that they ____________.
May use the report to conduct an internal fair lending review
The loan originators for consumer credit transactions secured by a dwelling in your institution are subject to all of the following requirements EXCEPT:
Membership in the National Mortgage Loan Originator Society (NMLOS)
Consumer High Cost Mortgage loans are subject to certain limitations, including which of the following?
Negative Amortization
You have recently joined a financial institution and are asked to review the products and services for compliance. You discover that one of the lobby brochures for a deposit product does not include important required disclosures. Which of the following actions should you take FIRST?
Notify management of the problem with the brochure and the risks involved with its use.
Which of the following are exempt from the requirement under Regulation GG to implement policies and procedures to block illegal transactions?
Participants in a money transmitting business
A bank's president would like to begin offering a new home equity line of credit product within two weeks. In all cases the borrower's principal dwelling will secure the loan. The president has already launched a planned advertising campaign for the bank's major service markets. What should the compliance professional do FIRST?
Perform a risk assessment to determine the bank's level of risk in offering this new product
First National Bank charges consumers for the cost of pulling a credit bureau report for all consumer closed-end mortgage loans. The fee of $24 is assessed at the time an application is received. This practice is:
Permitted, provided the fee is bona fide and reasonable
For a bank located in an MSA, which of the following is MOST relevant when identifying the bank's CRA assessment area?
Political or geographic subdivisions
The federal banking agencies have proposed an amendment to Regulation Z that would require a new early disclosure statement for loans secured by the borrower's principal dwelling. After reading the proposed change, what should the compliance professional do FIRST?
Prepare a summary document that outlines the effects the proposed rule would have on the bank's operations
To ensure that your institutions policies and procedures are in compliance with Regulation B and its requirements relating to spousal signatures, what is the most effective action you, as the compliance officer, should take?
Provide periodic training on spousal signature requirements of Regulation B to lending staff
RESPA prohibits which of the following bank practices?
Receiving complimentary flood certifications for its real estate portfolio when contracting for future flood determination services
Under the Right to Financial Privacy Act, a customer's authorization to release information must include which of the following?
Records to be disclosed
John Doe applies for a mortgage loan to purchase a duplex townhome. He intends to rent the duplex and use it as a tax shelter for his full-time employment income. He states on the application that the purpose of the loan is investment, adding that the property will not be his primary residence. Which of the following laws or regulations does NOT apply to this transaction?
Regulation Z
During a recent compliance examination, regulatory examiners found that the bank was not conducting flood hazard area determinations before closing on construction loans. The compliance professional has reviewed the files and agreed with the examiners' finding. What should be done FIRST?
Review the bank's flood policies and procedures to determine where the compliance failure occurred
During a recent compliance examination, regulators cited the bank for violations of various marketing regulations. How should the compliance professional FIRST respond?
Review the marketing materials and applicable regulations to verify the finding.
When reviewing for compliance under Regulation DD, which of the following items must be included in an advertisement for a time deposit account where a fixed interest rate is advertised?
The APY
The head of the banks collections and recovery department called you to ask about a proposed process improvement that he is considering for the department. He wants to reduce the number of third party debt collectors the bank uses to collect delinquent loans and use internal bank employees to conduct collection efforts, including calling delinquent customers and sending communications requesting payments. He wants your thoughts on the Fair Debt Collection Practices Act and its implications on such a change. Your advice to the collections and recoveries manager includes:
The Fair Debt Collection Practices Act does not apply to debts collected by bank employees, however, the employees should be trained to refrain from the unfair and abusive provisions of the Act
A bank has been meeting periodically with a local community activist group to get the groups input on the needs of the community and how the bank can help serve those needs through its lending activities. The bank president read an article about the CRA Sunshine Regulation and asked the compliance officer what the banks responsibilities are under this regulation as it relates to these meetings with the community group. Which of the following best represents the banks responsibilities under the CRA Sunshine Regulation?
The bank has no responsibilities under the CRA Sunshine Regulation in relation to the meetings
In which of the following situations may customers be told that information about their accounts has been requested by a federal government agency?
The bank is asked to provide additional information about an IRS Form 1099.
First National Bank provided a Loan Estimate disclosure to Mary and Bill Johnson with their mortgage loan application. The Loan Estimate was based on the 1003 application provided by the Johnsons. Two weeks later, the bank is sending the Johnsons a Revised Loan Estimate. Under which of the following changed circumstances is the bank permitted to issue a revised Loan Estimate?
The borrower subsequently decides to lock the rate when the advertised rates fall 20 basis points.
A bank is considering changing its business hours of operation. Currently, branches are not open on Saturdays and Sundays. The bank is considering opening all branches on Saturdays from 9:00 am to 11:00 am for routine teller transactions through the drive-up windows. The loan operations manager asks the compliance manager how this change will impact the process for mailing consumer loan disclosures to customers for mortgage loans. The compliance manager responds by explaining that:
The change will not affect the timing of delivery of Loan Estimates to consumers after receipt of an application.
Which of the following statements is NOT correct regarding the blocked countries and specially designated nationals covered by OFAC?
The customer's address must be outside the U.S. for OFAC to apply to the customer's transactions.
Which of the following statements describes a bank's reporting requirements when it awards a big-screen television, valued at $800, to a customer as a grand-opening prize?
The fair market value of the prize is reportable on Form 1099-MISC.
Your bank receives a federal agency administrative order requiring the bank to produce records pertaining to a customer. The bank is entitled to reimbursement from the federal agency under Regulation S, UNLESS:
The records are requested by the agency in connection with an investigation of the financial institution
On February 1, the bank board of directors approved the closing of one of its branches effective April 1 due to its continued unprofitability. Customers of the bank will be notified of the planned closing. The bank is at risk of violating which of the following regulatory requirements?
Timely notice to the appropriate federal regulatory agency
When developing a training plan for commercial lenders, which of the following regulations is least important to include?
Truth in Lending Act, CFPB Regulation Z
A number of bank customers are members of the Army Reserve and have been called to active duty for six months. Your bank's president wishes to issue a press release stating that the bank will suspend all loan payment requirements while loan holders are on duty, extend the maturity date of each loan, and permit interest to accrue at only 10% while the loan holders are on active duty. You are asked to review the press release. Which of the following statements represents the advice you should give the president?
Upon request, the bank must reduce the interest rate on the loans to 6% effective on the date that the service members are called to report for active duty, and remain at 6% until they are released from orders.
A compliance professional is a member of the task force studying how the bank can reduce customer complaints about holding deposits. One proposed solution involves purchasing an expensive system that will reduce the number of holds placed by evaluating the customer's history and relationship with the bank. Which of the following roles is MOST important for the compliance professional on the task force?
Validating the system to ensure it complies with regulatory restrictions
The examiners criticized your bank at the last examination for failing to conduct a BSA/AML risk assessment of its operations. You have been asked to complete the assessment. Which of the following categories is NOT suggested by the FFIEC Examination Manual for your risk assessment?
Vendors
HMDA requires institutions that lose their reporting exemption status because of size or location to begin reporting by the ____________.
calendar year following the year in which the exemption is lost
A banks credit standards for evaluating a consumers ability to repay a real estate mortgage loan should include:
consideration of the consumer's monthly payment on any simultaneous loan
Your bank is considering a candidate for a vacant director position. The GREATEST potential regulatory risk, if the individual is appointed, is his or her ____________.
current indebtedness to your institution
An internal fair lending review indicated no evidence of overt discriminatory practices. However, 60% of the unsecured loans approved to male applicants were charged loan fees that were lower than the bank's policy, and only 10% of the female applicants received reduced loan fees. There was insufficient documentation in the credit files to justify these pricing differences. The MOST appropriate action the compliance officer should take is to ____________.
develop specific policy provisions for fee exception approvals and documentation, and retrain lending personnel
One purpose of CRA Regulations is to ____________.
encourage banks to help meet the credit needs of their local community
When reviewing ATM dispute files for compliance with Regulation E provisions, you should determine whether __________.
errors were corrected not later than one business day after determination that an error occurred
To avoid a violation of the Regulation O prohibition against paying an overdraft of a director, a bank should ____________.
establish a written, preauthorized interest-bearing credit line with a specified repayment schedule, with each director to cover possible overdrafts
The PRIMARY purpose of the Right to Financial Privacy Act is to ____________.
establish specific procedures for federal government agencies seeking information about a customer's financial records
The PRIMARY objective of compliance monitoring for the minimum security devices regulations is ____________.
evaluation of security procedures established by the bank's security officer
A customer presented $13,000 in cash for deposit to her account. She withheld $4,000 from the transaction when the teller began to complete a CTR. In this situation, the bank must ____________.
file the appropriate SAR form with respect to the structured transaction
Regulation M covers leases for personal property ____________.
for personal, family, or household purposes for a period of time exceeding four months, for a total contractual amount not exceeding the current applicable threshold amount
In monitoring a bank's compliance with the federal Fair Housing Act, it is LEAST relevant to review ____________.
handicap accessibility to property secured by a first mortgage loan made by the bank
Under the Interagency Statement on Retail Sales of Nondeposit Investment Products, the required disclosures can be provided to the bank's customer in all of the following ways EXCEPT:
in writing by a teller when referring a customer to the investment sales area
A financial institution offers residential loans. After reading a new regulation that expands HOEPA coverage, the compliance officer analyzes the institution's lending portfolio and determines that no existing loans are covered. The compliance officer should NEXT ____________.
incorporate the new HOEPA triggers into existing training and procedures
A consumer reporting agency notifies your bank that an individual is disputing the accuracy of her credit report regarding information about a delinquent loan that your bank reported. Your bank is required to FIRST ____________.
investigate the issue and report the results back to the consumer reporting agency
You are developing bank procedures for determining when to escalate issues or problems identified as a result of repeat SAR filings on the same account. These procedures should include all of the following criteria EXCEPT ____________.
notifying the customer
If the bank does not obtain the TIN from the deposit account holder when the account is opened, the Bank Secrecy Act requires that the bank ____________.
obtain the TIN within a reasonable time after account opening
When establishing an exemption from currency transaction reporting for Phase II exempted customers, banks must perform all of the following EXCEPT ____________.
obtaining a signed customer exemption statement
An internal audit reveals APR calculation issues. In responding, you should FIRST ____________.
perform a root cause analysis
Your bank has just found out that there may have been a breach of confidential information affecting debit cards. You should advise senior management to FIRST ____________.
perform due diligence on the extent of the security breach
During a review of your bank's customer identification procedures, you are likely to find regulatory deficiencies if the bank does NOT ____________.
require verification of the identity of each customer
A compliance officer is monitoring the bank's opt-out forms and procedures for compliance with the requirements of the Privacy of Consumer Financial Information Regulation. A violation of this regulation will occur if the bank's opt-out form ____________.
requires the signatures of all joint account holders to be effective for joint accounts
An auditor asked for your guidance regarding an audit in process. Review of 20 adverse action notices revealed that 2 were sent late, and 2 did not show the name and address of the credit reporting agency when required by the Fair Credit Reporting Act. Each of the errors was made by a different employee. Given these findings, you should advise the auditor to ____________.
review more items to determine a root cause of the problem
During the past several years, a bank has acquired several banks through merger. Management has decided to standardize the various deposit products into a simplified list of products, and to change all accounts accordingly. This will create beneficial changes for some customers and adverse changes for others. With regard to informing customers of the changes under Regulation DD, the BEST course of action is to ____________.
revise the disclosures and mail them with a letter describing the changes, and stating that account holders should read about the new accounts
The dollar amount of the application reported on the HMDA LAR should be recorded as a number that is ____________.
rounded to the nearest thousand; for example, a loan for $150,400 should be reported as $150
In your fair lending self-monitoring program, you found a prohibited basis that would result in a regulatory violation was factored into the credit score. You should instruct management to FIRST ____________.
suspend the use of the credit scoring system until it can be corrected
A customer who has preauthorized transfers made on the 15th of each month to the utility company, sent written notification to the bank on the 5th of the current month that he wanted to discontinue the automatic transfers. The bank received the customer's notification on the 7th. On the 20th of the month, the customer telephoned to state that his account balance indicated that payment was NOT stopped. The bank should advise the customer that ____________.
the account will be credited promptly
ABC Bank is considering offering a special loan promotion in conjunction with the local cosmetic surgeon, Dr. Tucker, PC. The banks loan application forms will be available in the doctors office and patients who want to finance cosmetic surgery procedures can arrange financing directly with the bank. Dr. Tuckers officer will refer patients to the bank and provide bank application forms upon request. The banks application forms include an authorization that the applicant signs allowing the bank to obtain information from Dr. Tuckers office as necessary to process the application for credit. Which of the following is true in connection with such applications?
the bank is permitted to contact the doctor's officer to determine and verify the medical purpose of the loan
Under FIRREA Appraisal Standards, the definition of ''market value'' is NOT based on the consummation of a sale and passing of title under conditions whereby:
the buyer and seller agree to special or creative financing terms
Your bank has ten joint marketing agreements with non-affiliated third parties to offer additional financial products to your customers. Each of the contracts renews every two years. Prior to renewal, you should review the new contracts to determine whether ___________.
the contract contains the appropriate third-party confidentiality clause
A bank may provide services to a non-bank affiliate under contract for fees if ____________.
the terms are substantially the same as those prevailing at the time for comparable non-affiliated transactions
The bank made a purpose loan to a customer secured by margin stock. Now the customer wants to sell that stock and provide a substitution. The withdrawal and substitution is permitted under which of the following circumstances?
the withdrawal and substitution will not cause the existing loan to exceed the maximum 50% loan to collateral value
A recent regulatory change increased the amount of FDIC insurance coverage for individual depositors. The compliance manager should FIRST _____________.
update the content of employee training material
