CRCM| 550 QUESTIONS| 71 PAGES|
WITH COMPLETE SOLUTIONS
When developing a training plan for commercial lenders, which of the following regulations is
least important to include? Correct Answer: Truth in Lending Act, CFPB Regulation Z
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? Correct
Answer: Prepare a summary document that outlines the effects the proposed rule would have on
the bank's operations
During a recent compliance examination, regulators cited the bank for violations of various
marketing regulations. How should the compliance professional FIRST respond? Correct
Answer: Review the marketing materials and applicable regulations to verify the finding.
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? Correct Answer: Validating the system to ensure it
complies with regulatory restrictions
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? Correct
Answer: Document the fact that the level of risk present with manual systems is acceptable to
the mortgage department business unit
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? Correct Answer: Review the bank's flood policies and procedures to
determine where the compliance failure occurred
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? Correct Answer: Perform a risk assessment to
determine the bank's level of risk in offering this new product
,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? Correct Answer: Form a task force of the business unit
managers whose departments will be affected by the law to collectively form an action plan
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 ____________. Correct Answer: notifying the customer
Your bank is considering closing a branch office. You should review which of the following
FIRST? Correct Answer: Bank's branch closing policy and procedures
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?
Correct Answer: The APY
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? Correct Answer: Vendors
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? Correct Answer: Convert the NOW account to a non-interest bearing account
and discuss other options with the customer.
Which of the following disclosures must be provided in writing at the time a variable rate deposit
account is opened? Correct Answer: Frequency of potential rate changes
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? Correct Answer: the withdrawal and substitution will not
cause the existing loan to exceed the maximum 50% loan to collateral value
When conducting an audit of IRS tax compliance procedures, you should select a sample of
which of the following forms? Correct Answer: 1099A
The loan originators for consumer credit transactions secured by a dwelling in your institution
are subject to all of the following requirements EXCEPT: Correct Answer: Membership in the
National Mortgage Loan Originator Society (NMLOS)
RESPA prohibits which of the following bank practices? Correct Answer: Receiving
complimentary flood certifications for its real estate portfolio when contracting for future flood
determination services
,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: Correct Answer: the
buyer and seller agree to special or creative financing terms
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? Correct Answer: Compare the date that a written disclosure
was mailed to the customer with the date of the telephone conversation.
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? Correct
Answer: Distribute the summary and advise that the financial institution may send a comment
letter.
Which of the following represents the required method for providing a consumer with the
insurance consumer protection disclosures in connection with a loan transaction? Correct
Answer: At the time of loan application
Which of the following is considered a non-listed business that is eligible for exemption from
CTR reporting requirements? Correct Answer: Licensed pari-mutual race track
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? Correct Answer: CRA
For a bank located in an MSA, which of the following is MOST relevant when identifying the
bank's CRA assessment area? Correct Answer: Political or geographic subdivisions
A bank may provide services to a non-bank affiliate under contract for fees if ____________.
Correct Answer: the terms are substantially the same as those prevailing at the time for
comparable non-affiliated transactions
Which of the following types of collateral is EXEMPT from flood insurance regulations? Correct
Answer: Agricultural land that includes gas or liquid storage tanks
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 ____________. Correct Answer: revise the disclosures and
, mail them with a letter describing the changes, and stating that account holders should read about
the new accounts
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? Correct Answer: Determine whether granting exemptions is a manageable risk for the
bank.
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 ____________. Correct Answer: May use the report to
conduct an internal fair lending review
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 ____________. Correct Answer: investigate the issue and report the
results back to the consumer reporting agency
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: Correct Answer: 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
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?
Correct Answer: $2,000 by July 13th
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
WITH COMPLETE SOLUTIONS
When developing a training plan for commercial lenders, which of the following regulations is
least important to include? Correct Answer: Truth in Lending Act, CFPB Regulation Z
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? Correct
Answer: Prepare a summary document that outlines the effects the proposed rule would have on
the bank's operations
During a recent compliance examination, regulators cited the bank for violations of various
marketing regulations. How should the compliance professional FIRST respond? Correct
Answer: Review the marketing materials and applicable regulations to verify the finding.
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? Correct Answer: Validating the system to ensure it
complies with regulatory restrictions
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? Correct
Answer: Document the fact that the level of risk present with manual systems is acceptable to
the mortgage department business unit
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? Correct Answer: Review the bank's flood policies and procedures to
determine where the compliance failure occurred
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? Correct Answer: Perform a risk assessment to
determine the bank's level of risk in offering this new product
,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? Correct Answer: Form a task force of the business unit
managers whose departments will be affected by the law to collectively form an action plan
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 ____________. Correct Answer: notifying the customer
Your bank is considering closing a branch office. You should review which of the following
FIRST? Correct Answer: Bank's branch closing policy and procedures
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?
Correct Answer: The APY
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? Correct Answer: Vendors
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? Correct Answer: Convert the NOW account to a non-interest bearing account
and discuss other options with the customer.
Which of the following disclosures must be provided in writing at the time a variable rate deposit
account is opened? Correct Answer: Frequency of potential rate changes
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? Correct Answer: the withdrawal and substitution will not
cause the existing loan to exceed the maximum 50% loan to collateral value
When conducting an audit of IRS tax compliance procedures, you should select a sample of
which of the following forms? Correct Answer: 1099A
The loan originators for consumer credit transactions secured by a dwelling in your institution
are subject to all of the following requirements EXCEPT: Correct Answer: Membership in the
National Mortgage Loan Originator Society (NMLOS)
RESPA prohibits which of the following bank practices? Correct Answer: Receiving
complimentary flood certifications for its real estate portfolio when contracting for future flood
determination services
,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: Correct Answer: the
buyer and seller agree to special or creative financing terms
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? Correct Answer: Compare the date that a written disclosure
was mailed to the customer with the date of the telephone conversation.
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? Correct
Answer: Distribute the summary and advise that the financial institution may send a comment
letter.
Which of the following represents the required method for providing a consumer with the
insurance consumer protection disclosures in connection with a loan transaction? Correct
Answer: At the time of loan application
Which of the following is considered a non-listed business that is eligible for exemption from
CTR reporting requirements? Correct Answer: Licensed pari-mutual race track
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? Correct Answer: CRA
For a bank located in an MSA, which of the following is MOST relevant when identifying the
bank's CRA assessment area? Correct Answer: Political or geographic subdivisions
A bank may provide services to a non-bank affiliate under contract for fees if ____________.
Correct Answer: the terms are substantially the same as those prevailing at the time for
comparable non-affiliated transactions
Which of the following types of collateral is EXEMPT from flood insurance regulations? Correct
Answer: Agricultural land that includes gas or liquid storage tanks
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 ____________. Correct Answer: revise the disclosures and
, mail them with a letter describing the changes, and stating that account holders should read about
the new accounts
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? Correct Answer: Determine whether granting exemptions is a manageable risk for the
bank.
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 ____________. Correct Answer: May use the report to
conduct an internal fair lending review
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 ____________. Correct Answer: investigate the issue and report the
results back to the consumer reporting agency
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: Correct Answer: 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
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?
Correct Answer: $2,000 by July 13th
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
