CRCM Sample Exam 100 Questions

64. When conducting an audit of IRS tax compliance procedures, you should select a sample of which of the following forms? A. 1099A B. CTR Form 104 C. 17 F-IX-A D. FFIEC-004

A. 1099A

45. 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? A. 2 months B. 1 month C. 6 months D. 3 months

A. 2 months

100. Your bank is updating its code of conduct for the first time in several years. As the banks compliance officer you are asked to review the draft changes to the policy. Among the changes is an increase in the maximum dollar amount that is permitted for gifts received from customers to bank employees or given to customers by bank employees (such as for holiday or special occasion celebrations). The bank president wants to increase the dollar limit from $25 to $50. Gifts valued at $50 or less would be permitted. What feedback would you give on the suggested change to the code of conduct? A. Approve the change because the increased dollar amount is deemed reasonable based on your analysis B. Recommend that the change not be made because the dollar threshold is too high C. Recommend that the policy be changed to eliminate any gifts regardless of dollar value because gifts are prohibited under the Bank Bribery Act D. Approve the change, but with the stipulation that any gift above $25 must be pre-approved by the bank's board of directors

A. Approve the change because the increased dollar amount is deemed reasonable based on your analysis

58. Which of the following represents the required method for providing a consumer with the insurance consumer protection disclosures in connection with a loan transaction? A. At the time of loan application B. Included in the Truth-in-Lending disclosures C. In a separate written disclosure at loan closing D. With the required settlement service provider disclosure

A. At the time of loan application

10. Anywhere Bank is receiving frequent complaints from borrowers about having to delay the loan closing because a copy of the appraisal must be provided to them at least three business days prior to loan consummation and appraisals are taking a very long time in this area. So, the bank has decided to allow borrowers to waive their right to receive a copy of the appraisal as follows: A. Borrowers may provide a waiver in writing as long as it is received by the bank at least three business days before loan consummation and as long as the appraisal is provided to them no later than at loan consummation B. Borrowers may provide a waiver in writing as long as it is received by the bank prior to loan consummation and as long as the appraisal is provided to them no later than 30 days after loan consummation C. Borrowers may provide a waiver in writing as long as it is not on a bank-prepared form and describes the bona fide personal financial emergency that is the basis for the requested waiver and as long as the appraisal is provided to them no later than 30 days after loan consummation D. Borrowers may provide a waiver in writing as long as it is received by the bank with the Intent to Proceed with the loan application and as long as the appraisal is provided to them no later than at loan consummation

A. Borrowers may provide a waiver in writing as long as it is received by the bank at least three business days before loan consummation and as long as the appraisal is provided to them no later than at loan consummation

28. Which one of the following policies would be prohibited under the Americans with Disabilities Act? A. Charging employees who use service animals at work a reasonable fee to cover carpet cleaning B. Prohibiting smoking in all public areas C. Requiring a medical examination of a job applicant for a job requiring a medical examination D. Conducting random drug testing/screening

A. Charging employees who use service animals at work a reasonable fee to cover carpet cleaning

73. Which of the following disclosures must be provided in writing at the time a variable rate deposit account is opened? A. Frequency of potential rate changes B. Consumer's right to withdraw funds at any time C. Average rate paid on the account during the past 5 years D. An example, based on a hypothetical $1,000 deposit, illustrating how the APY would have been affected by interest rate changes during the past 15 years

A. Frequency of potential rate changes

71. 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? A. Let the borrower know that he could request a Letter of Map Amendment from FEMA to remove the property from the SFHA B. Waive the flood insurance for the loan until the borrower obtains an exemption from FEMA for the property C. Obtain a survey of the property and submit the information to the flood determination service and request a reconsideration of the determination D. Submit a formal Letter of Map Amendment request to FEMA and waive the flood insurance until FEMA make a final determination

A. Let the borrower know that he could request a Letter of Map Amendment from FEMA to remove the property from the SFHA

61. Under CRA rules, banks other than small banks must report which of the following types of loans? A. Loans to small farms B. Automobile loans secured by home equity C. Unsecured consumer loans D. Unsecured consumer credit card lines

A. Loans to small farms

52. 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: A. Permitted, provided the fee is bona fide and reasonable B. Not permitted, unless consumers have been given written estimated loan disclosures and indicated an intent to proceed C. Not permitted, unless at least three business days have lapsed since the application was received by the creditor D. Permitted, provided the fee is charged to all applicants and nonrefundable

A. Permitted, provided the fee is bona fide and reasonable

40. 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? A. Regulation Z B. ECOA C. HMDA D. The Fair Housing Act

A. Regulation Z

27. In which of the following situations may customers be told that information about their accounts has been requested by a federal government agency? A. The bank is asked to provide additional information about an IRS Form 1099. B. The Secret Service is conducting its protective functions and furnishes a compliance certificate. C. A customer's records relating to a crime against another bank are subpoenaed by a federal grand jury. D. The government is engaging in an authorized foreign intelligence activity and furnishes a compliance certificate.

A. The bank is asked to provide additional information about an IRS Form 1099.

98. Which of the following statements is NOT correct regarding the blocked countries and specially designated nationals covered by OFAC? A. The customer's address must be outside the U.S. for OFAC to apply to the customer's transactions. B. Nonbank subsidiaries of U.S. banks must comply with OFAC regulations C. The bank is subject to fines, regardless of whether the funds get to the blocked country or specially designated national. D. Fines and penalties for OFAC violations of the Syrian Sanctions Regulation can cost banks and individuals up to $1 million in criminal penalties and/or up to 20 years in jail.

A. The customer's address must be outside the U.S. for OFAC to apply to the customer's transactions.

30. One purpose of CRA Regulations is to ____________. A. encourage banks to help meet the credit needs of their local community B. require banks to satisfy all of the credit needs of their local community before they make loans elsewhere C. require that banks increase their real estate lending D. ensure that the majority of a bank's real estate loans are to individuals living in low- and moderate-income neighborhoods

A. encourage banks to help meet the credit needs of their local community

11. To avoid a violation of the Regulation O prohibition against paying an overdraft of a director, a bank should ____________. A. establish a written, preauthorized interest-bearing credit line with a specified repayment schedule, with each director to cover possible overdrafts B. charge sufficiently large overdraft fees to directors in order to deter overdrafts C. report directors' overdrafts in writing, within ten days, to the bank's supervisory agency D. limit the aggregate outstanding overdrafts of any one director to 2.5% of capital and surplus, or $100,000, whichever is less

A. establish a written, preauthorized interest-bearing credit line with a specified repayment schedule, with each director to cover possible overdrafts

3. 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 should ____________. A. file the appropriate SAR form with respect to the structured transaction B. make an entry in its log of cash sales of monetary instruments C. file a CTR for the $13,000 transaction D. refuse the transaction

A. file the appropriate SAR form with respect to the structured transaction

72. When establishing an exemption from currency transaction reporting for Phase II exempted customers, banks must perform all of the following EXCEPT ____________. A. obtaining a signed customer exemption statement B. filing Form 110 (Designation of Exempt Person) C. establishing and maintaining a monitoring system to detect suspicious currency activities D. manually reviewing the exempt person supporting documentation

A. obtaining a signed customer exemption statement

21. An internal audit reveals APR calculation issues. In responding, you should FIRST ____________. A. perform a root cause analysis B. attend a seminar on Regulation Z C. implement training for applicable employees D. contact vendors regarding system enhancements

A. perform a root cause analysis

63. 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 office 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? A. the bank is permitted to contact the doctor's office to determine and verify the medical purpose of the loan B. the bank is not permitted to contact the doctor's office for information relating to the credit application C. the bank is permitted to contact the doctor's office only if the loan is approved D. the bank is permitted to contact the doctor's office to obtain any information about the applicant because the applicant provided the signed authorization

A. the bank is permitted to contact the doctor's office to determine and verify the medical purpose of the loan

69. The marketing officer requests your review of a savings account proposal. Savings accounts currently pay 1.5% 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. How should you advise the marketing officer? A. The bank cannot make this change, as it would be contrary to the deposit agreement. B. A notice must be provided to affected depositors in advance of the change. C. This change can be made immediately, because the compounding basis is not a contractual right, and can be changed at any time. D. This change can be made, but not until after 60 days, in accordance with Regulation E.

B. A notice must be provided to affected depositors in advance of the change.

54. Which of the following types of collateral is EXEMPT from flood insurance regulations? A. Individual condominium units B. Agricultural land that includes gas or liquid storage tanks C. Mobile homes attached to a foundation that is leased space D. Commercial buildings under construction where the interior is unfinished

B. Agricultural land that includes gas or liquid storage tanks

14. When reviewing exemptions for continued eligibility under the Bank Secrecy Act, a review of which of the following is LEAST helpful? A. Suspicious Activity Reports (SARs) B. Currency Transaction Reports (CTRs) C. Customer organizational documents D. Reports of International Transportation of Currency or Monetary Instrument Reports (CMIRs)

B. Currency Transaction Reports (CTRs)

38. 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? A. File SARs only after they have been reviewed by the board of directors. B. Designate one department, such as Legal or Security, to process, review, and file SARs on behalf of the bank. C. Allow individual branches to file SARs on behalf of the bank to ensure that filing time requirements are met. D. Allow each business group or product group (e.g., Consumer Loans, Auto Loans) to develop and implement procedures to process, review, and file SARs related to its particular group.

B. Designate one department, such as Legal or Security, to process, review, and file SARs on behalf of the bank.

83. A good customer complaint management program should include all of the following EXCEPT: A. Evaluation of length of response times B. Evaluation of the customer racial and ethnic characteristics C. Evaluation of root causes D. Evaluation of recordkeeping

B. Evaluation of the customer racial and ethnic characteristics

59. Which of the following should the compliance officer accomplish FIRST to implement the information sharing provisions of the Fair Credit Reporting Act? A. Draft a privacy policy B. Identify the institution's affiliates C. Modify account holders' agreements by adding opt-out language D. Prepare opt-in agreements to mail to existing account holders

B. Identify the institution's affiliates

12. Consumer High Cost Mortgage loans are subject to certain limitations, including which of the following? A. No variable rates of interest B. Negative Amortization C. No escrowed accounts for taxes and insurance D. Points and fees exceeding 3 percent of the loan amount

B. Negative Amortization

49. 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? A. Draft revisions to the notice to bring it into compliance. B. Notify management of the problem with the brochure and the risks involved with its use. C. Notify management that use of this brochure must be discontinued immediately. D. Notify management that corrected brochures need to be sent to affected customers as soon as possible.

B. Notify management of the problem with the brochure and the risks involved with its use.

94. Which of the following are exempt from the requirement under Regulation GG to implement policies and procedures to block illegal transactions? A. Gateway operators that receive ACH debits from a foreign sender B. Participants in a money transmitting business C. Money transmitting business operators D. Beneficiary bank participant in a wire transfer system

B. Participants in a money transmitting business

56. When conducting a compliance review of consumer closed-end mortgage periodic statements, be sure to check for: A. Balance on which the finance charge is computed B. Past Payments Breakdown C. Minimum Payment Warning Statement D. Grace period, or that no grace period applies

B. Past Payments Breakdown

19. 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? A. Fees on the account B. The APY C. The basis for the interest rate D. A description of how any early withdrawal penalty will be calculated

B. The APY

89. 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? A. The bank must document in writing the minutes of all meetings and place the minutes in its CRA Public File B. The bank has no responsibilities under the CRA Sunshine Regulation in relation to the meetings C. If the bank and the community group agree to any specific actions during the meetings, the bank must make those agreements public D. If the meetings last for more than 3 years, the bank must formalize an agreement with the community group in writing and make that agreement public

B. The bank has no responsibilities under the CRA Sunshine Regulation in relation to the meetings

6. A bank is considering changing its business hours of operation. Currently, branches arre 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: A. The change will require the bank to consider Saturday as a business day for purposes of delivering Loan Estimates to consumers after receipt of an application. B. The change will not affect the timing of delivery of Loan Estimates to consumers after receipt of an application. C. The change will affect the timing of delivery of Revised Loan Estimates to consumers after receipt of an application. D. The change will require the bank to consider Saturday as a business day for purposes of the 7 day waiting period prior to loan consummation.

B. The change will not affect the timing of delivery of Loan Estimates to consumers after receipt of an application.

65. 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: A. The records pertain only to an individual customer B. The records are requested by the agency in connection with an investigation of the financial institution C. The customer is not informed of the request in advance D. The records are stored electronically

B. The records are requested by the agency in connection with an investigation of the financial institution

48. 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? A. Products B. Vendors C. Customers D. Services

B. Vendors

46. 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 ____________. A. past overdraft history B. current indebtedness to your institution C. current indebtedness to correspondent banks D. level of stock ownership in your institution

B. current indebtedness to your institution

29. The PRIMARY purpose of the Right to Financial Privacy Act is to ____________. A. require a financial institution to keep customers informed of inquiries about their accounts by federal government agencies B. establish specific procedures for federal government agencies seeking information about a customer's financial records C. establish a process by which a customer may object to a financial institution releasing his account information to federal government agencies D. prohibit a financial institution from providing customer information to anyone without the customer's permission

B. establish specific procedures for federal government agencies seeking information about a customer's financial records

41. The PRIMARY objective of compliance monitoring for the minimum security devices regulations is ____________. A. identification of instances of suspicious activity by the bank B. evaluation of security procedures established by the bank's security officer C. review of instances of criminal activity in the area that could impact the bank D. determination of whether new employees are fingerprinted

B. evaluation of security procedures established by the bank's security officer

82. In monitoring a bank's compliance with the federal Fair Housing Act, it is LEAST relevant to review ____________. A. the bank's financing of rental property B. handicap accessibility to property secured by a first mortgage loan made by the bank C. the bank's participation in advertising for the sale of housing in a community within the bank's market area D. the HMDA/LAR for the bank, if applicable, or, alternatively, the loan register for first mortgage loans generated by the mortgage department

B. handicap accessibility to property secured by a first mortgage loan made by the bank

20. 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 ____________. A. promptly cease reporting any information regarding the account in question B. investigate the issue and report the results back to the consumer reporting agency C. contact the individual directly and ask her to complete a dispute form D. immediately update bank records to avoid further furnishing of inaccurate information

B. investigate the issue and report the results back to the consumer reporting agency

39. 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 ____________. A. closing the account B. notifying the customer C. notifying law enforcement, if applicable D. review by senior management and legal staff

B. notifying the custome

88. 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 ____________. A. requires the consumer to mail the form back to the bank to be effective B. requires the signatures of all joint account holders to be effective for joint accounts C. requires the consumer to call a toll-free telephone number during normal business hours in order to opt-out D. permits its on-line banking customers to opt out electronically by completing the form on the bank's on-line banking site

B. requires the signatures of all joint account holders to be effective for joint accounts

16. 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 ____________. A. order an immediate stop to making loans B. suspend the use of the credit scoring system until it can be corrected C. contact all affected denied applicants regarding the potential unfair treatment and ask them to re-apply D. rewrite the applicable policies and procedures to include a second review program to provide an independent evaluation

B. suspend the use of the credit scoring system until it can be corrected

55. 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: A. the buyer and seller are typically motivated B. the buyer and seller agree to special or creative financing terms C. the price represents the normal consideration for the property sold D. a reasonable time is allowed for exposure on the open market

B. the buyer and seller agree to special or creative financing terms

66. ABC Bank was informed by its examiners that a bank practice was potentially unfair because it met ALL BUT which of the following standards of unfairness under UDAAP in the Dodd-Frank Act? A. the practice is likely to cause substantial injury to consumers B. the practice is prohibited by regulation C. the injury to the consumer is not reasonably avoidable by the consumer D. the injury is not outweighed by a counterveiling benefit to the consumer

B. the practice is prohibited by regulation

91. A bank may provide services to a non-bank affiliate under contract for fees if ____________. A. the contract may be cancelled at any time B. the terms are substantially the same as those prevailing at the time for comparable non-affiliated transactions C. the bank provides such services exclusively to the non-bank affiliate D. prior written regulatory approval is obtained

B. the terms are substantially the same as those prevailing at the time for comparable non-affiliated transactions

23. 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 A. 15, Regulation D B. 21, The deposit contract C. 30, Regulation DD D. 60, Regulation E

C. 30, Regulation DD

42. 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 _____. A. 50% B. 72% C. 78% D. 80%

C. 78%

31. 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. A customer asks to withdraw $5,000 from his checking account and asks that the withdrawal be issued in the form of a cashier's check. B. An individual purchases $12,000 worth of traveler's checks using cash to pay for the purchase. C. 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. D. A customer deposits $6,000 in cash to her savings account.

C. 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.

93. 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: A. Request supporting documentation from the borrower to verify borrower's identity B. Acknowledge receipt of the complaint in writing within 10 days C. Acknowledge receipt of the complaint in writing within 5 business days D. Notify all consumer reporting agencies that the bank uses that a dispute has been filed on the account by the consumer

C. Acknowledge receipt of the complaint in writing within 5 business days

32. Your bank is considering closing a branch office. You should review which of the following FIRST? A. Percentage of out-of-area deposits B. Ratio of loans in the assessment area to total loans C. Bank's branch closing policy and procedures D. How much time remains on the building lease

C. Bank's branch closing policy and procedures

50. In an audit of the institutions adjustable rate mortgage loan portfolio you should test for: A. CHARM Booklets provided to all borrowers at closing B. CHARM Booklets provided to all applicants at the time of application C. CHARM Booklets provided to all applicants at the time an application form is provided or before a nonrefundable fee is paid, whichever is earlier D. CHARM Booklets provided to all borrowers within 3 business days of receiving a completed application

C. CHARM Booklets provided to all applicants at the time an application form is provided or before a nonrefundable fee is paid, whichever is earlier

47. 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? A. National Flood Disaster Protection Act B. Truth-in-Lending Act C. CRA D. Regulation CC

C. CRA

18. 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? A. Inform the customer that the account is closed. B. Close the account and, pursuant to federal regulations, require reimbursement by the customer of interest paid on the account. C. Convert the NOW account to a non-interest bearing account and discuss other options with the customer. D. Re-title the account as ABC Widget Manufacturing, and remove Inc. from the title.

C. Convert the NOW account to a non-interest bearing account and discuss other options with the customer.

90. 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: A. Determine your bank's asset size as of December 31st of the prior calendar year B. Determine the number of mortgage loans your bank originates as of the current date C. Determine the number of mortgage loans your bank services together with any affiliates as of the current date D. Determine whether your bank is located in a rural or underserved county

C. Determine the number of mortgage loans your bank services together with any affiliates as of the current date

2. You have learned that the Consumer Financial Protection Bureau 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? A. Wait to distribute information until the rule is final. B. Distribute the summary and begin efforts to comply with the proposed requirements. C. Distribute the summary and advise that the financial institution may send a comment letter. D. Distribute the summary along with guidance on how to lobby Congress to amend the recent law.

C. Distribute the summary and advise that the financial institution may send a comment letter.

79. 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? A. Purchase-money mortgages B. Refinancings of installment loans when no new money has been advanced C. Home equity and ARM second mortgages D. Renewals of home equity lines of credit with no new advances

C. Home equity and ARM second mortgages

34. 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? A. Prepare an annual report to the board of directors B. Write detailed procedures for notifying law enforcement of reported incidents of identity theft C. Identify all the types of covered accounts the bank offers D. train all staff on how to respond to customers who are victims of identity theft

C. Identify all the types of covered accounts the bank offers

78. Which of the following types of customers are NOT eligible to have a NOW account? A. Individuals B. Two individuals in a joint account C. Limited Liability Corporation D. Municipal Water District

C. Limited Liability Corporation

22. Under the Right to Financial Privacy Act, a customer's authorization to release information must include which of the following? A. Customer's TIN B. Date the account was opened C. Records to be disclosed D. Authorization for a period of one year

C. Records to be disclosed

43. Anywhere State Bank originated 28 closed-end HMDA reportable loans in 2015 and 28 closed-end HMDA reportable loans in 2016. In 2017, however, the Bank only originated 23 closed-end HMDA reportable loans as of December 31, 2017. The Bank does not offer home equity lines of credit. What is the banks HMDA data collection and reporting obligations for 2017 and 2018? A. Submit HMDA report for 2017 by March 2, 2018 and continue to collect HMDA data for 2018 based on meeting 2016 loan threshold B. Do not submit HMDA report for 2017 and do not collect HMDA data for 2018 based on not meeting 2017 loan threshold C. Submit HMDA report for 2017 by March 1, 2018 and do not collect HMDA data for 2018 based on not meeting 2016 and 2017 loan threshold D. Do not submit HMDA report for 2017 based on not meeting 2017 threshold, but collect HMDA data for 2018

C. Submit HMDA report for 2017 by March 1, 2018 and do not collect HMDA data for 2018 based on not meeting 2016 and 2017 loan threshold

60. 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: A. The bank employees will need to be fully trained in the provisions of the Fair Debt Collection Practices Act, since it applies to their collection activities B. Debts collected by bank employees must be collected in the name of a fictitious third party in order to protect the bank from liability C. 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 D. The collection process should not be brought in house because of Fair Debt Collection Practices Act restrictions

C. 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

95. 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? A. The customer had originally requested a rate lock, but the bank had neglected to disclose the rate lock fee. B. The bank disclosed $200 for an appraisal fee, but the affiliated appraiser that the bank usually uses is not available and the only appraiser that will conduct the appraisal charges $350. C. The borrower subsequently decides to lock the rate when the advertised rates fall 20 basis points. D. The bank provided the original estimate based on an application that did not include the property address, and now that the borrower has provided the property address, a revised estimate is necessary.

C. The borrower subsequently decides to lock the rate when the advertised rates fall 20 basis points.

17. 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? A. The prize is not reportable B. The cost of the prize is reportable on Form 1099-INT. C. The fair market value of the prize is reportable on Form 1099-MISC. D. The fair market value of the prize is added to the interest paid on the customer's account and reported on Form 1099-INT

C. The fair market value of the prize is reportable on Form 1099-MISC.

25. 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? A. Adverse action notification B. Analysis of community impact C. Timely notice to the appropriate federal regulatory agency D. Posted notification of closing on the premises of the branch to be closed

C. Timely notice to the appropriate federal regulatory agency

53. A data integrity review for CRA and HMDA data submissions should include which of the following? A. Analysis of loans made by geography B. Analysis of applications by race, sex, and income C. Verification of key data field accuracy D. Verification that loan denials were denied in accordance with bank loan policy

C. Verification of key data field accuracy

74. When evaluating a banks Information Security Program for compliance with regulatory standards, an auditor should review: A. Whether the program is designed to restrict consumer access to account data B. Whether the program is designed to prevent inadvertent disclosure of protected health information to an affiliated entity C. Whether the program is designed to ensure the security and confidentiality of customer information D. Whether the program is designed to limit the access to customer information to essential personnel

C. Whether the program is designed to ensure the security and confidentiality of customer information

75. Anywhere Bank wants to introduce relationship pricing with reduced loan rates for customers with higher deposit balances. Does this practice present any fair lending concerns to the bank? A. No, if the pricing standard is set forth in the bank's credit policy B. No, if the pricing is justified by competitive analysis C. Yes, there is a potential for disparate impact if the majority of the bank's higher deposit balance customers are all white males D. Yes, there is a potential for disparate treatment based on a prohibited basis

C. Yes, there is a potential for disparate impact if the majority of the bank's higher deposit balance customers are all white males

4. 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 ____________. A. note the event, but indicate that no overt discrimination was found B. conduct a complete demographic and regression analysis to determine the full extent of this fair lending issue C. develop specific policy provisions for fee exception approvals and documentation, and retrain lending personnel D. anticipate a referral to the Department of Justice on the next regulatory exam due to inconsistent application of loan policy that has resulted in disparate impact

C. develop specific policy provisions for fee exception approvals and documentation, and retrain lending personnel

92. When reviewing ATM dispute files for compliance with Regulation E provisions, you should determine whether __________. A. the bank completed its investigation within 90 days after receiving the error notice B. the bank notified the customer in writing when an error occurred C. errors were corrected not later than one business day after determination that an error occurred D. notifications to customers that no error occurred included a telephone number for the customer to call for additional inquiries

C. errors were corrected not later than one business day after determination that an error occurred

80. Regulation M covers leases for personal property ____________. A. used in connection with a home-based business B. in excess of the current applicable threshold amount, except for airplane leases C. 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 D. used for personal, family or agricultural purposes

C. 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

26. 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 ____________. A. begin 28% withholding of interest B. close the account after 30 days C. obtain the TIN within a reasonable time after account opening D. notify the Treasury Department of affected account information

C. obtain the TIN within a reasonable time after account opening

7. 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 ____________. A. continue with the audit, as this is not a problem B. cite the errors as technical exceptions C. review more items to determine a root cause of the problem D. read Regulation B and the Fair Credit Reporting Act for guidance

C. review more items to determine a root cause of the problem

37. 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 ____________. A. do nothing, because a disclosure need not be given when an institution acquires an account through acquisition or merger B. send a notice to all account holders with the first statement that reflects the changes C. revise the disclosures and mail them with a letter describing the changes, and stating that account holders should read about the new accounts D. send a message via periodic statement that changes will occur and that account holders should request a disclosure showing the new accounts

C. revise the disclosures and mail them with a letter describing the changes, and stating that account holders should read about the new accounts

76. 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? A. the borrower completes a new FR-U-1 B. the loan is converted to an unsecured loan C. the withdrawal and substitution will not cause the existing loan to exceed the maximum 50% loan to collateral value D. the withdrawal/substitution is not permitted

C. the withdrawal and substitution will not cause the existing loan to exceed the maximum 50% loan to collateral value

8. A recent regulatory change increased the amount of FDIC insurance coverage for individual depositors. The compliance manager should FIRST _____________. A. develop a new policy in this area B. maintain the current program without change C. update the content of employee training material D. revise the internal monitoring schedule in this area

C. update the content of employee training material

68. Under First National Bank's Funds Availability Policy, funds are generally given next day availability. However, case-by-case holds may be applied and exception holds are permitted under certain circumstances, including large deposits. On Monday, May 15, 2018, the FNB teller supervisor decides to place an exception hold on a $12,000 insurance proceeds check deposited by Mary Williams into her account. A hold notice is mailed to Mary at the close of business on Monday, May 14th. When should funds be made available to the depositor? A. 200 by Tuesday May 15th, $11,800 by Wednesday May 16th B. $12,000 by Monday May 21st C. $200 by Tuesday May 15th, $5,000 by Wednesday May 16th, $6,800 by Monday May 21st D. $5,000 by Tuesday May 15th, $7,000 by Monday May 21st

D. $5,000 by Tuesday May 15th, $7,000 by Monday May 21st

99. 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? A. Voicing opinions on pricing and features of the package B. Informing the committee that bank and investment products cannot be packaged together C. Keeping informed about the package so that compliance can be monitored once the package is implemented D. Advising the committee on disclosure requirements, regulatory limitations, and liability provisions affecting the package

D. Advising the committee on disclosure requirements, regulatory limitations, and liability provisions affecting the package

67. Which of the following procedures BEST determines whether a bank is in compliance with IRS regulations regarding deposit accounts? A. Preparation of a computer printout showing TINs for all corporations with average balances in excess of $10,000 a month B. Analysis of all signature cards to assure that at least two persons are authorized to sign checks, and that their TINs are on the cards C. Analysis of a bank's last report on Form 1097C-1, and determination of whether follow-up reports have been filed within 60 days of the date of filing D. Determination of whether TINs are properly requested for all new accounts opened

D. Determination of whether TINs are properly requested for all new accounts opened

96. 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? A. Exempt all large commercial customers by the end of the month B. Hire more staff to handle the volume of CTRs generated by your bank. C. Provide your commercial customers with an exemption request form D. Determine whether granting exemptions is a manageable risk for the bank.

D. Determine whether granting exemptions is a manageable risk for the bank.

15. 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: A. Have a loan-to-deposit ratio in each state that equals or exceeds the published ratio for the state in which the branches are located B. Have an average loan-to-deposit ratio for all combined offices of the National Bank in all states that equals or exceeds the published ratio for the state in which the bank's headquarters is located C. Have a loan-to-deposit ratio in each state that equals or exceeds 50% of the highest loan-to-deposit ratio of any host state in which the bank has a branch D. Have a loan-to-deposit ratio in each state that equals or exceeds 50% of the loan-to-deposit ratio of each host state

D. Have a loan-to-deposit ratio in each state that equals or exceeds 50% of the loan-to-deposit ratio of each host state

1. 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? A. Drafting the content of the electronic disclosures B. Setting reasonable and competitive fees for the services offered C. Determining which products to include in the electronic delivery system D. Identifying the consumer protection regulatory provisions on liability and error resolution

D. Identifying the consumer protection regulatory provisions on liability and error resolution

62. 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? A. Discontinue all advertising and suspend payment of vendors until the review is complete. B. Conduct an audit of Marketing Department and report the findings of the board of directors. C. Discuss future advertising plans with management. D. Inform the Marketing Department that all current and future advertising material will be reviewed by the Compliance Office prior to publication.

D. Inform the Marketing Department that all current and future advertising material will be reviewed by the Compliance Office prior to publication.

36. Under the Bank Protection Act, how often must a security program provide for training of officers and employees? A. Annually B. As needed C. Continually D. Initially and periodically

D. Initially and periodically

86. 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? A. Loan policy B. Compliance program policy C. Board of Directors minutes D. Internal monitoring audits

D. Internal monitoring audits

70. Which of the following is considered a non-listed business that is eligible for exemption from CTR reporting requirements? A. Pawn shop B. Auction house C. Licensed real estate broker D. Licensed pari-mutual race track

D. Licensed pari-mutual race track

35. 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 ____________. A. Must destroy the report because of fair lending concerns B. May provide the report to a third party vendor who is using it to determine who will receive a flyer about home equity loans C. Must provide the report to an affiliate for marketing purposes D. May use the report to conduct an internal fair lending review

D. May use the report to conduct an internal fair lending review

77. The loan originators for consumer credit transactions secured by a dwelling in your institution are subject to all of the following requirements EXCEPT: A. A criminal background check through NMLSR or law enforcement agency B. Registration under the SAFE Act C. Periodic training covering state and federal loan origination requirements D. Membership in the National Mortgage Loan Originator Society (NMLOS)

D. Membership in the National Mortgage Loan Originator Society (NMLOS)

24. For a bank located in an MSA, which of the following is MOST relevant when identifying the bank's CRA assessment area? A. Competitors' trade areas B. Data derived from marketing surveys C. Data derived from zip code analysis D. Political or geographic subdivisions

D. Political or geographic subdivisions

5. 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? A. Research state signature requirements in all states in which customers could reside or own property and prepare a legal brief for management on the findings B. Ensure that the institution adopts a continuing guarantee for all commercial loans C. Review customer complaints relating to spousal signatures in the lending department D. Provide periodic training on spousal signature requirements of Regulation B to lending staff

D. Provide periodic training on spousal signature requirements of Regulation B to lending staff

81. RESPA prohibits which of the following bank practices? A. Paying referral fees to its employees B. Paying fees to its affiliate's employees for loan referrals if the employees performed a sufficient number of settlement services C. Paying fees to brokers for loan referrals if the brokers performed a sufficient number of settlement service D. Receiving complimentary flood certifications for its real estate portfolio when contracting for future flood determination services

D. Receiving complimentary flood certifications for its real estate portfolio when contracting for future flood determination services

97. A reverse mortgage is subject to which of the following disclosure requirements? A. Regulation Z Closing Disclosure 3 business days prior to loan consummation B. Regulation Z Periodic Statement within a reasonably prompt time after the payment due date C. Regulation Z Ability to Repay certification D. Regulation Z Loan Disclosures prior to loan consummation

D. Regulation Z Loan Disclosures prior to loan consummation

85. 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? A. The bank is in full compliance with the Servicemembers' Civil Relief Act. B. The bank must reduce the interest rate to 6% on the date that the service persons enter the area declared as an official ''Disaster Area.'' C. The bank must reduce the interest rate on loans to military persons to 6% effective 30 days after notice is received by the bank. D. 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.

D. 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.

87. By policy, a bank does not collect income information on employee loan applications. When completing the HMDA LAR's income field, the bank must record the ____________. A. Zero dollar amount B. income information, regardless of its policy C. income information, but may use codes to protect the employee's identity D. code for ''not applicable''

D. code for ''not applicable''

33. A banks credit standards for evaluating a consumers ability to repay a real estate mortgage loan should include: A. consideration of the number of deposit accounts held at other institutions B. consideration of the length of the deposit relationship with the institution C. consideration of the value of the property securing the loan D. consideration of the consumer's monthly payment on any simultaneous loan

D. consideration of the consumer's monthly payment on any simultaneous loan

84. Every bank's CRA public file must contain all of the following information EXCEPT a ____________. A. list of branches B. map of the assessment area(s) C. list of the types of services that the institution offers D. description of current efforts made to help meet community credit needs

D. description of current efforts made to help meet community credit needs

44. 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: A. orally during sales presentations B. orally and in writing at the time an investment account is opened C. in advertisements and promotional brochures D. in writing by a teller when referring a customer to the investment sales area

D. in writing by a teller when referring a customer to the investment sales area

51. During a review of your bank's customer identification procedures, you are likely to find regulatory deficiencies if the bank does NOT ____________. A. require a CIP log at each branch in the prescribed format B. require its employees to copy the customer's driver's license C. permit a passport as an acceptable form of identification D. require verification of the identity of each customer

D. require verification of the identity of each customer

9. The bank has decided to begin offering a full range of non-deposit investment products to retail customers. Your FIRST step should be to ____________. A. review the state insurance licensing requirements B. develop a program to obtain Series 6 & 7 licenses for the sales staff C. develop new account forms that include processes to determine suitability D. review the Interagency Statement on the Retail Sale of Nondeposit Investment Products

D. review the Interagency Statement on the Retail Sale of Nondeposit Investment Products

13. 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 ____________. A. the problem must be corrected by the utility company B. the bank has no liability, but will discontinue the transfer effective as of the next billing cycle C. federal law requires 30-day prior written notice to stop payment on preauthorized transfers D. the account will be credited promptly

D. the account will be credited promptly

57. 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 ___________. A. it would be cost-effective to offer the products directly B. the third party has provided privacy notices to your customers C. the products offered by the third party are competitively priced D. the contract contains the appropriate third-party confidentiality clause ID:

D. the contract contains the appropriate third-party confidentiality clause ID