Easy

Any banking transaction of MORE than ____ is reported to this institution for examination purposes.

$10,000

Robert Allen Stanford's total federal tax liens amount to over

$210 million

Bank of Credit and Commerce International (BCCI) came under the scrutiny by numerous financial regulators and intelligence agencies in the

1980

The Basel recommendation for protecting banks from credit risk originated in _____ ?

1988

in Which of the following years there was NOT a U.S. financial crash?

2001

What year was Robert Allen Stanford criminally charged?

2009

What is a Bank Run?

A series of unexpected cash withdrawals caused by a sudden decline in depositor confidence or fear that the bank will be closed by the chartering agency.

Money laundering began in which era?

Alcohol prohibition era

BCCI's scandal serves us as a way to:

All of the above

Illegal money goes through this process in order to be integrated to make it look as legal funds.

All of the above

The Foreign Account Tax Compliance Act of 2010 (FATCA)

All of the above

UBS is a global banking institutions which provides:

All of the above

What is the process of money laundering

All of the above

Which of these groups of people conducting criminal activities DO NOT create havoc for international bankers?

All of the above create havoc for international bankers

A prospective entrant, be it a domestic commercial bank a foreign bank, or an investment bank not in the business, must address three fundamental issues:

All the above

Bank of Credit and Commerce International (BCCI) was involved in

All the above

Where was Stanford International Bank founded?

Antigua

The Accord Agreement and its Committee, which is responsible for implementation of the Accord, operate in the town of _______ ?

Basel in Switzerland

What are some macroeconomic variables that the Federal Reserve attempts to correct?

Both A & B

What markets do offshore financial services include?

Both A & B

Which market is subject to national supervisory, regulatory, and monetary policy controls?

Both A & B

What was the purpose of the Glass-Steagall Act?

Both A and C

Mr. Raoul Weil, top UBS banker, was

Charged and found not guilty of tax evasion

What was the purpose behind the creation of FATF?

Combat money laundering activity

A crisis that can cause a bank failures in several countries simultaneously is often known as _______________ .

Contagion

The crisis that can cause bank crashes is referred to as

Contagion

What Includes political risk, exchange rate risk, economic risk, sovereign risk, and transfer risk?

Country risk

When a party to agreements fails to meet its financial obligation, it is known as

Credit risk

Which of the following bank legislation was NOT enacted during the Great Depression crisis?

Dodd-Frank

The Main Objective of Basel II expands on the original Basel agreements in which way?

Enhance financial soundness of the International Banking System

A bank run involves a large inflow of money into commercial banks.

False

A bank's loans are considered liabilities because they are owed to the bank by the borrowers.

False

After the US market, Japan has the largest market in the world for Merger and Acquisition transactions.

False

Are customer deposits (checking accounts) classified as assets on a commercial bank's balance sheet?

False

Bank crashes affect only emerging market societies.

False

Bank runs do not occur due to liquidity problems

False

Central Bank receives guidelines from the World Bank.

False

Contagion risk is not systematic

False

Empirical evidence shows that most bank crashes occur when a series of macroeconomic variables stay at equilibrium for too long

False

On July 4, 1994, the assets of the Bank of Credit and Commerce International (BBCI) were seized by regulators in six countries.

False

The Bank Secrecy Act of 1970 (BSA) was enacted in the United States to prevent banks from providing their clients' account information to the government.

False

The Basel Committee is located in Paris, France

False

The following agency was established to combat money laundering activity globally:

Financial Action Task Force

Which of these nations established the agency known as the Financial Action Task Force (FATF)?

Group of Seven (G7)

_______ is an international agency responsible for responding to financial crisis that are spreading in different parts and regions of the planet.

IMF-International Monetary Fund

Which country in not one of the G7?

Iran

Investors in the financial market operate under the assumption that the system

Is efficient and perfect

In the money laundering process, the activity that disguises illegal transactions is known as

Layering

According to the Basel Agreements, what is the main guideline for Central Bankers?

Maintain capital adequacy

Which of these is also known as systematic risk?

Market risk

___________ tend, perhaps more often than not, to run ahead of the regulators.

Markets and Institutions

The EU passed antitrust regulations in 1990 that provides: What Includes political risk, exchange rate risk, economic risk, sovereign risk, and transfer risk?

Only deals involving combined worldwide sale of 5 billion euros, or two or more companies with EC sales of 250 million euros, will be reviewed by the EC's merger task force.

What includes risks resulting from breakdowns in internal procedures, people, and systems?

Operational risk

Which option best describes the purpose of the Glass Steagall Act?

Provide safety and security of deposits and establish confidence in the financial market and the banking system.

_________ focused on " truth in new issues," requiring prospectuses and creating underwriting liabilities to be shared by both companies and their investment bankers.

Securities Act of 1933

Empirical evidences suggest that a bank crash can result from all of the following reasons EXCEPT:

Taking in too much money as deposits

Which organization was created by the Glass-Steagall Act to guarantee every depositor's account up to $100,000?

The FDIC

The act the prohibited banks from underwriting securities is

The Glass-Steagail Act

The Act implemented in 1992 that required the free movement of goods, capital, people, and ideas within the European Economic Community

The Single Market Act

What caused the Herstatt or Settlement Risk?

Time zone difference

Adverse selection and moral hazard are the factors responsible for asymmetric information in the markets.

True

An efficient system means that there is symmetric information in the financial market.

True

As global banking activities have expanded, new financial products proliferated, and many of them are tradable in the market.

True

Bank of Credit and Commerce International (BCCI) was an international bank founded by a Pakistani financier.

True

Credit risk is the risk of loss of principal or financial reward from failure to repay a loan

True

Does the initials (MBOs) stands for management buyouts?

True

FATCA stands for the Foreign Account Tax Compliance Act of 2010.

True

Globalization of the economic and financial systems has led to an increase in interdependencies amongst nations of the globe for goods and services.

True

In assessing risk, is the unsystematic risk diversifiable?

True

In order to protect the economic and financial welfare of the banking system, cash transactions deposited or withdrawn from a bank in excess of $10,000 must be reported to FinCEN, a United States Government Agency of the Treasury Department.

True

In order to shield themselves from unpredictable risk caused by circumstances outside of their control, international banks should have strategies and efficient structures in place to confront uncontrollable externalities.

True

Liquidity risk is risk of being unable to sell an asset fast enough to avoid losses

True

Money laundering not only undermines and compromises the very foundation of our economic activity; it destroys the social fabric of a society as well.

True

Offshore markets for financial services are often beyond the reach of national authorities

True

Operational risk is defined as the risk of loss resulting from inadequate or failed processes, people and systems or from external events.

True

Overall, a bank crash can be defined as a situation where a bank fails to pay the depositors, or a lack of liquidity that prevents its participation in its original orientation of taking deposits and packaging loans, and its participation in the securities market underwriting financial instruments.

True

Problems arise when national financial institutions take some of their activities offshore into the European or other foreign markets.

True

Reporting requirements under FATCA include a certification by the Financial Institutions's responsible officer

True

The Act established to protect the U.S. against money laundering and terrorism is known as the USA PATRIOT Act of 2001.

True

The Federal Reserve is also known as the Central Bank of the United States

True

The German Model towards takeover rules and procedures protects the rights of major shareholders, such as banks and insurance companies, to act paternalistically and responsibly, though not always visibly, in the interest of all shareholders.

True

The International Monetary Fund ( IMF ) also provides guidelines for central bankers to follow in order to direct the licensing and operation of the banking system.

True

The Single Market Act required the free movement of goods, capital, people and ideas in order to enhance economic growth in the European Union.

True

The USA Patriot Act of 2001 is an acronym that refers to: Uniting and Strenghtening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism.

True

The bank-capital regulations of most Western countries follow the terms recommended by the Basel Committee on Banking Supervisions of the Bank for International Settlements in Basel, Switzerland.

True

The bigger the bank, the bigger the social and economic responsibility it possesses.

True

The first Basel agreement came about after Germany declared Herstatt Bank insolvent.

True

The most notable regulatory agency for regulations and supervision guidelines is the Basel Accord.

True

The potential for laws to change and become unfavorable towards you is legal risk.

True

The role of the Basel Accord is to enact supervisory guidelines and make recommendations for maintaining the capital adequacy requirement for all central bankers.

True

The role of the Federal Reserve is to conduct monetary policies to correct the deviations caused by the macroeconomic variables.

True

To maintain a sound financial system, especially in capitalistic industrial nations, it is essential that the government play an important role in helping to avoid the deviations that occur in macroeconomic variables through the fluctuations that occur in economic activity.

True

Transfer risk, sovereign risk, and exchange risk are components of country risk.

True

What countries were involved in the Herstatt Risk case?

US and Germany

The risks to which the banking system is exposed to include:

all of the above

Tax evasion is defined as

both a and b

The main focus and orientation of an off-shore private bank's operation has been traditionally to provide _______ and ___________.

secrecy and confidentiality

According to the Basel I Accord, the recommended capital adecuacy requirement was set to be 8% of assets.

true