EMT Practice Test

1. Question Content...

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Question1: ACME Bank has a separate page on its Web site where it describes insurance products, such as life insurance and health and disability insurance. The page invites consumers to call the bank officer in charge of selling these products. The Web site's lending page also describes consumer loans and uses the following phrase: "Have peace of mind-credit life and disability insurance are available on all consumer loans to qualified borrowers." Neither the insurance page nor the lending page mentions insured deposits. What does ACME need to do to make sure its Web site is in compliance?

Question2: Which of the following practices is authorized by the Federal Reserve Act?

Question3: First National Bancshares, Inc., a bank holding company, filed an application with its Federal Reserve Bank on March 1 to acquire a subsidiary bank. On March 15 the Federal Reserve Board asked First National for more information. On April 1 the Federal Reserve Bank received the completed application and accepted it. On April 5 the Federal Reserve Bank notified First National of the April 1 acceptance and referred the application to the Federal Reserve Board. Under the normal rules, by what date must the Federal Reserve Board act on the application?

Question4: In which of the following cases would First National Bank be required to give a branch closing notice?

Question5: Any of the following foreign correspondents for which the Federal Reserve maintains an account EXCEPT:

Question6: What obligation does a bank have to disclose a covered CRA agreement 40 months after it terminates?

Question7: First National Bankshares, Inc., a bank holding company, held substantially all of the voting stock of an equipment manufacturing corporation as collateral for a loan to the owner. On May 15 the borrower defaulted and on September 1, after proper notice was given, the bank foreclosed its security interest on the stock and exercised its rights to vote the stock at appropriate times. On December 31 the bank transferred the stock to a subsidiary corporation, FNB, Inc., to market the stock for sale more effectively.
What is the longest time period that FNB, Inc., can possibly hold the stock?

Question8: In which of the following circumstances is it LEAST appropriate for a bank to file a SAR regarding Internet activity?

Question9: 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?

Question10: What is the definition of a "small" business under CRA rules?

Question11: Federal regulations define special-purpose credit-12 CFR 202.8 to include:

Question12: In Sender's agreement-12 CFR 210.28 it is clearly mentioned that:

Question13: Which of the following groups of employees should be trained on the detailed use of W-9 forms?

Question14: How long after discovery does a bank have to report any lost or missing securities when criminal activity is suspected?

Question15: Debt collector may not abuse or harass the consumer by:

Question16: In which of the following activities may a bank engage and NOT be considered a municipal securities dealer?

Question17: Martha Smith of First National Bank is attempting to close a large commercial loan to a manufacturing equipment company. In negotiating the interest rate on the loan Martha states that if the company will move some of its demand accounts to the bank, it could get a lower interest rate. Is this wrong?

Question18: Safe National Bank has a variety of consumer lending products. Among them are debt cancellation contracts that allow for the cancellation of a consumer's debt if certain events happen. The bank solicits sales for these contracts when the consumer makes an in-person loan application. What does Safe National have to do at the time of the application and solicitation?

Question19: If a bank receives a request for financial disclosure, how may the bank fulfill this request?

Question20: Which of the following factors would NOT be considered when evaluating whether specific behavior by a banker violates the statute?

Question21: Which of the following does an extension of credit NOT include?

Question22: In which of the following cases is a branch closing notice required?

Question23: Which of the following loans would First National report on its loan application register?

Question24: A sender and any prior collecting banks grant a security interest to the sender's administrative Reserve Bank in all of their respective assets in the possession of the Reserve Bank to secure any of their obligations to the Reserve Bank. This security interest attaches when any warranty is breached or any obligation to the Reserve Bank is incurred. The Reserve Bank may take any action under applicable law to enforce its security interest; including exercising its right to set off amounts against any funds it holds. This situation holds true when:

Question25: Which of the following interest-bearing accounts is EXEMPT from Form 1099 annual information reporting requirements under IRS regulations?

Question26: In April Lillian Redmond, the teller supervisor for First National Bank, discovers five counterfeit $20 bills in several teller drawers. In May and in June she discovers two additional counterfeit $20 bills. She has no knowledge of criminal activity on the part of any of the bank's employees or customers. She does not suspect any particular person in this transaction. Which of the following statements is true?

Question27: When completing and filing a SAR, what is the bank NOT required to do?

Question28: Which of the following sources is the least desirable to use when monitoring a correspondent bank's capital?

Question29: What is the maximum number of government securities transactions a bank may have and still remain exempt from the Government Securities Act?

Question30: ____________ is an agent or a subagent of the owner of an item; agency terminates when it receives payment for an item in finally collected funds and makes the proceeds available to the sender, and the time for commencing all actions against it has expired.

Question31: 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?

Question32: 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?

Question33: Which of the following credit arrangements would most likely be considered a purpose credit because it is indirectly secured by margin stock?

Question34: Which of the following transactions does NOT require prior approval of the Federal Reserve Board?

Question35: When may an automatically renewable time deposit account be considered for inclusion in the unclaimed property report?

Question36: Which of the following must be included in a branch closing notice to a bank's regulatory agency?

Question37: First National Bank would like to make a loan to an affiliate bank. Which of the following would NOT be acceptable as collateral for such a loan?

Question38: How may a bank limit the definition of executive officer?

Question39: Which of the following is NOT a factor considered by the Federal Reserve Board when it evaluates an application under Regulation Y?

Question40: FDIC guidance lists three requirements to ensure compliance with spousal signature rules include all of the following EXCEPT:

Question41: FA presents cash to the bank and seeks to wire it to his spouse, RA, in Cub A.
The OFAC list identifies RA as a specially designated national. Under OFAC Regulations, what should the bank do?

Question42: The mortgage lending department of Bank XYZ received some inquiries from potential applicants who are visually impaired. The bank would like to comply with ADA concerning these potential applicants, but it does not want to spend a significant amount of money. Which of the following statements is true?

Question43: First National Bank is a member of a multibank holding company. The bank makes ARM loans and occasionally purchases ARM loans from its affiliate national and state banks as well as from nonaffiliated banks. Which of the following practices is NOT acceptable under the OCC ARM regulation?

Question44: A bank is conducting due diligence for a foreign correspondent bank account. Which of the following is NOT required information?

Question45: An individual comes into the bank and makes a $6,000 cash deposit into a checking account. At the same time, the individual buys a $7,000 cashier's check with cash. According to the Bank Secrecy Act, what is the bank is required to do?

Question46: Transactions with which of the following government securities would NOT subject a bank to the registration requirements of the Government Securities Act?

Question47: Martin Taylor, a loan officer at First National Bank, is a long-time friend of Bill Evans, a local homebuilder.
Bill would like a line of credit at the bank and discusses the potential loan with Martin. During the discussion, Martin expresses his desire to build a house one day and Bill offers to build him one "at cost plus 5 percent." If Martin accepts Bill's offer, can he continue to act as his loan officer?

Question48: ________________is defined as every aspect of an applicant's dealing with a creditor, beginning with information gathering and continuing through to the servicing and collection of the loan.

Question49: Second National has decided to close one of its less profitable neighborhood branches. Which of the following actions is NOT required of the bank under federal law?

Question50: In a review of a bank's home mortgage loan application register, which of the following must be included in Regulation C reporting?

Question51: Trust Co. and First National Bank are located in the same city and each has assets of over $20 million.
The president of First National has been asked to serve as a director of Trust Co. First National has no trust department and no trust operations. Trust Co. operates solely as a trust company. Would this relationship violate the prohibitions against management official interlocks in Regulation L?

Question52: First National Bank is a wholly owned subsidiary of Bank Holding Company, Inc. Which of the following companies is NOT an affiliate of First National Bank?

Question53: A bank does not know all of the specific information to be disclosed on the lease at the time of the consummation. What may the bank do after attempting to obtain the information?

Question54: These are the definitions of _____________: The refusal to grant credit in substantially the amount or on substantially the terms requested in an application (and the applicant uses or expressly accepts the credit offered) A termination of the account or an unfavorable change in the terms of an account, unless the change affects substantially all of the lender's accounts of that type. A refusal to increase the amount of credit available to an applicant who has made an application for an increase

Question55: Which state receives the reporting and escheatment of unclaimed property?

Question56: With regard to standards for wear and use of leased property, which of the following statements is true?

Question57: Which of the following statements regarding applications is correct?

Question58: Which of the following sets of policies or procedures is NOT a requirement of a security program?

Question59: By sending an item to a Reserve Bank, a sender:

Question60: Which of the following is true regarding extensions of credit to executive officers, directors, and principal shareholders?

Question61: In Processing and evaluating applications-12 CFR 202.6, protected income part is also under discussion.
Which of the following considerations is NOT its part?

Question62: When does a gift accepted by a banker clearly violate the Bank Bribery Act?

Question63: In which of the following situations is the bank NOT required to report lost or stolen securities?

Question64: Which of the following entities is exempt from the requirements of the Government Securities Act?

Question65: Bank A offers safe deposit services in a vault area that contains a door too narrow for wheelchair passage.
The bank cannot widen the door because of the vault construction. Therefore, when a customer in a wheelchair needs access to a safe deposit box the customer cannot enter the vault. The bank provides viewing rooms for all safe deposit customers, and one of these rooms has a door wide enough for a disabled customer to enter. Which of the following must the bank do to provide safe deposit box service to wheelchair customers?

Question66: A bank has a stand-alone ATM in a high crime area. Due to concerns for the safety of individuals using the ATM, management decides to close it. According to branch closing policy statements issued by federal regulators, which of the following actions should the bank take?

Question67: Which of the following actions subjects a lender to mortgage interest reporting requirements?

Question68: It is an instrument or promise or order to pay money (whether negotiable or non negotiable) sent by a sender and payable in a Federal Reserve District or sent to and collectible in funds acceptable to a Reserve Bank. An electronic image of this document together with electronic information describing that item in an approved format will be considered a valid instrument.

Question69: 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?

Question70: Which of the following must a "large" bank maintain as part of its CRA program?

Question71: Which of the following customers may be exempted under Phase II of the Bank Secrecy Act?

Question72: The BSA officer has just been notified by the chief operations officer that, due to a glitch in the bank's OFAC interdiction software, wires have been regularly transmitted to a bank on the SDN list. Based on the OFAC Enforcement Guidance, what should the BSA Officer do FIRST to attempt to mitigate any penalties?

Question73: By what date must financial institutions submit their loan application registers to their federal supervisory agency?

Question74: Mammoth Enterprises is a new customer to the bank. It is a wholly owned subsidiary of Mammoth Corporation. Which of the following statements, if true, would make Mammoth Enterprises an exempt customer at the bank?

Question75: For which of the following business activities must a bank holding company obtain prior approval of the Federal Reserve Board?

Question76: By presentation or transmission of an item a Reserve Bank warrants to a subsequent collecting bank and paying bank that:

Question77: According to the 2007 interagency statement on subprime mortgage lending, what should an institution offering mortgage loans to subprime borrowers provide before submission of an application?

Question78: Is the renewal of a loan considered to be a new extension of credit for purposes of valuing the collateral under Regulation U?

Question79: Payment to a beneficiary is made at the earlier of the time when:

Question80: Which of the following describes the record retention requirements under Regulation B for a credit application from a business with annual gross revenues in excess of$1,000,000?

Question81: Under HMDA, what is the threshold for reporting the interest rate spread for first lien mortgage loans?

Question82: 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?

Question83: When is it permissible for a bank that is a government securities broker or dealer to refrain from filing a Form G-FIN-5 or a Form MSD-5 when an employee terminates the associated person status?

Question84: Generally, a financial institution is required to ascertain if securities certificates they have taken by pledge, transfer, or otherwise have been reported as missing, lost, counterfeit, or stolen. When is it NOT required to take such actions?

Question85: Which of the following employment practices is NOT legal under ADA?

Question86: Which of the following transactions requires completion of FinCEN Form 104, a CTR?

Question87: When may a bank pay an overdraft of $5,000 created by an executive officer of the bank?

Question88: Validation of debt says:

Question89: A bank has given a customer a merchandise gift with a fair market value of $25.00 for opening a deposit account. Which of the following statements describes the proper reporting status of this gift?

Question90: If the lender is subject to the mortgage interest reporting requirement, which of the following actions is NOT required?

Question91: The Reserve Bank may recover from the sender the attorneys' fees if an action is brought against a Reserve Bank on the basis of:

Question92: A member bank wants to sell assets to an affiliated bank that is 100 percent owned by the same bank holding company. Is this transaction allowed?

Question93: Bob's wife is HIV-positive due to a blood transfusion during an appendectomy 15 years ago. She is not yet sick, but takes medication to prevent the onset of AIDS. Bob occasionally needs to take time off from work to take her for testing at Johns Hopkins in Baltimore. Because of complaints about Bob's exposure to this disease, employees have asked HR to limit his contact with them and with customers. The bank has asked Bob not to eat in the lunchroom with the other employees and has placed Bob in a position where he has limited customer contact. Does this company have any potential ADA liability?

Question94: Transfers involving entries to accounts maintained at two different Reserve Banks are:

Question95: If a bank is a government securities broker or dealer, what are its responsibilities when it obtains a Form G-FIN-4 or an MSD-4 from an employee?

Question96: If the returned check is an electronic item that is not a representation of a ___________, Reserve Banks will indemnify a bank to which the check is returned if the bank incurs losses as a result of indemnities the bank would be required to make under Regulation CC in connection with a substitute check later created from the returned check. A Reserve Bank will not be liable, however, if the loss could be attributed to a lack of good faith or failure to exercise ordinary care on the part of any person who handled the item.

Question97: When conducting a records search pursuant to a FinCEN request, what must a bank search?

Question98: A current member of the board of directors at First Savings Association (an institution with $150 million in total assets) was a director at First National Bank (an institution with total assets of $200 million) for many years. The two institutions are located in the same town. Before being elected to the board of First Savings, the director retired from the First National board. To honor his years of service with First National, the bank made him a director emeritus for life. He can attend any board meeting but cannot vote. He may speak to matters before the board and receives a director's fee. In actuality, however, the director never attends board meetings. Does this relationship violate Regulation L?

Question99: A compliance officer receives a call from a loan officer who asks for advice on what she should do with a stock certificate (1,437 shares of IBM) from a new loan customer who wants to pledge it in support of a loan that has been approved at your bank. What should the compliance officer tell her FIRST?

Question100: ACME Bank is a state nonmember bank with all of its offices in one state. However, it also has an Internet Web site where it advertises consumer credit and accepts applications from a five-state regional are A.
Two of the states are community property states. The other three are not. What is the best explanation for what ACME bank's management should do to comply with the FDIC ECOA spousal signature guidance?

Question101: A banking agency is conducting a credit needs determination. Which of the following is NOT a criterion used in such a determination?

Question102: First National Bank sold several of its mortgage loans to individual investors and now services the loans for the individuals. First National Bank collects more than $600 on most of these mortgages and deposits the money into the account of the investors. At the end of each year, First National Bank sends the investors a summary of transactions on the mortgages and a detailed breakdown of the principal and interest payments made. Who is responsible for filing the mortgage interest information returns?

Question103: Mrs. Franklin has two mortgage loans at First National Bank on which she makes monthly payments. On Loan A she made 13 payments last year, mailing the last payment on December 28. It was received the afternoon of January 2 and credited on January 3. The amount of interest paid on Loan A in the first 12 payments was $1,000. There was $155 of interest on the 13th payment. On Loan B, she made 12 payments; each contained interest accrued to the fourth day of the month. The last payment was mailed on December 19 and was received and credited on December 23. The last payment contained interest accrued to January 4. The total interest paid on Loan B was $2,000, of which $100 accrued between January 1 and January 4 of the next year. How much interest must First National Bank report?

Question104: Which of the following is MOST effective in strengthening an anti-money- laundering program involving cash transactions?

Question105: For which of the following must a bank obtain Form FR U-1 when a loan is in excess of $100,000?

Question106: Reserve Banks must issue operating circulars, which, together with Regulation J, govern the details of handling items through the Reserve Bank, including

Question107: Credit scoring systems:

Question108: State National Bank is a $250 million community bank. It makes a variety of consumer and commercial loans, regularly transmits funds via wire transfers for its customers, and issues commercial and stand-by letters of credit. Which of the following transactions can State National make without checking the OFAC SDN list and without incurring liability?

Question109: Bank B is a correspondent of Bank A.
Which of the following must be included in Bank A's calculation of credit exposure to Bank B?

Question110: 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?

Question111: Jayne Logan, a loan officer at State National Bank, has recently recruited Mr. David Roberts as a new loan customer. She has known Mr. Roberts for 10 years and handled his lending transactions at another bank where she previously worked. As his first transaction with State National Bank, Mr. Roberts pledges stock that is traded on the NYSE. The stock is received directly from Mr. Roberts, who has his secretary personally deliver it to the bank. Is the bank required, in this instance, to send a lost or stolen securities inquiry regarding the stock? Why or why not?

Question112: Which of the following is (are) NOT covered by the regulation?

Question113: Which of the following elements is NOT required to be in a repurchase agreement between a bank that is a government securities dealer and a counterparty?

Question114: Which of the following is required to be reported on ABC Bank's HMDA LAR?

Question115: ACME Bank is a $600 million institution with 15 branches within three counties. Because of its proximity to Mexico, the bank has many foreign national customers and makes many foreign wire transfers for its customers. Currently the bank's branch managers print the OFAC list of SDNs and place them in strategic places in each branch. The wire transfer department keeps its own copy of the list. The compliance officer has implemented an annual auditing program to check the bank's compliance with OFAC regulations. The findings of this audit are provided to the bank's board of directors annually. The bank's regulatory agency has indicated to management that the bank has a high risk for BSA/AML/OFAC compliance. Of the following actions, which would be the most effective to strengthen the bank's OFAC compliance?

Question116: Which of the following actions is NOT a custodial requirement of the Government Securities Act?

Question117: Your institution has identified a transaction by an existing depositor that should be blocked under OFAC requirements. The branch manager contacts you for specific instructions. Before reporting the transaction to OFAC, what should the bank do?

Question118: When must a bank make its mortgage loan disclosure statement available?

Question119: First National Bank has made three loans to Mrs. Elmwood. Two of the loans are regulated credits (they are for the purpose of purchasing margin stock and secured by margin stock). The third loan is for the purpose of purchasing margin and nonmargin stock, and the loan is secured by real estate and margin stock. Can the bank avoid having the third loan combined with the other two for Regulation U purposes?

Question120: Which of the following representations on the HMDA loan application register is a violation of Regulation C?

Question121: One of the check collection requirements is sending items to Reserve Banks. In this requirement:

Question122: When helping a loan officer determine whether the bank must give a written adverse action notice to a business loan applicant, what should the compliance officer consider?

Question123: QRS State Bank is being examined under the lending test. Which of the following is the most relevant criteria for the lending test?

Question124: A bank that is a government securities broker accepts money from a customer for the purchase of securities on Monday and does not purchase the securities by the end of the day on Tuesday. Does the bank have any responsibilities under the Government Securities Act?

Question125: First National Bank owns a data processing company that sells financially related data processing services to various businesses in the community. Daniel Tyler, a loan officer, is negotiating a loan to a local CPA firm. He would like to make the loan conditional on the CPA firm's use of the subsidiary data processing firm. May he do so?

Question126: Which of the following relationships does NOT violate Regulation L?
* Relationship A: First National Bank is located in the same city as an affiliate of First Savings and Loan.
First National and the affiliate share a board member.
* Relationship B: State Bank and an affiliate of First National Bank are located in the same RMSA but not in the same town. State Bank has assets of $60 million, and the affiliate has assets of $7 million. The two institutions share a board member.
* Relationship C: Savings and Loan Association and Bank Holding Company do not have offices within the same RMS
Bank Holding Company's assets are in excess of $1.75 billion, and Savings and Loan Association's assets are in excess of $2.5 billion. These institutions share a board member.

Question127: Mr. Roberts has three loans at First National Bank: Loan A made to purchase a car, secured by the car; Loan B made to purchase stock, secured by a lake lot; and Loan C made to pay taxes, secured by a rental house he owns. Last year he paid $2,500 in interest on Loan A; $550 in interest on Loan B; and $1,000 in interest on Loan C.
How much interest will First National Bank report to the IRS?

Question128: When returning items to a Reserve Bank, the paying and returning banks:

Question129: During a recent compliance examination, regulators cited the bank for violations of various marketing regulations. How should the compliance professional FIRST respond?

Question130: Which of the following statements is true regarding the lessee's ability to purchase the leased property?

Question131: ACME national bank plans to acquire Smith Brothers insurance agency and make it an operating subsidiary of the bank. ACME is considered a well-managed and adequately capitalized bank. What regulatory-related action must ACME take to obtain the agency?

Question132: Robin Martin made an individual application to the bank for a car loan. She has just returned to work on a regular basis because she was a full-time homemaker until recently, when her last child entered school.
The loan officer would like to ask her about her husband. Under what circumstances can the officer ask Robin about her husband?

Question133: The sender's liability for warranties and indemnities that a Reserve Bank makes for a substitute check is subject to the following conditions and limitations EXCEPT:

Question134: Which of the following transactions is subject to the provisions of Regulation O?

Question135: Which of the following is NOT included in the definition of margin stock?

Question136: In Receiver's agreement-12 CFR 210.28 it is clearly mentioned that:

Question137: ABC Bank has an interactive Internet Web site at which it takes consumer credit applications. At the time an applicant completes an application on the Web site and submits it, the applicant also is asked for his or her email address. If the application is denied, ABC sends an adverse action notice to the applicant's email address listed on the application. Using this procedure, what is ABC Bank's responsibility?

Question138: Time to bring action against a Reserve Bank:

Question139: If a bank makes a loan that is in compliance with Regulation U, what will be the status of the loan at its consummation?

Question140: Under Regulation M, what is a "consumer lease"?

Question141: Milton Edwards leased an automobile from First National Bank. The lease contained a provision whereby Milton would be liable for the automobile at the end of the lease based on its fair market value. At the end of the lease, the bank notified Milton that the value of the automobile, based on industry publications, was
$10,500 and required him to pay that amount to obtain ownership of the property. Milton objected and requested that the car be individually appraised. What must the bank do?

Question142: While Presenting items for payment:

Question143: According to federal regulations, what must a security officer do when establishing a bank security program?

Question144: Which of the following activities is NOT a permissible nonbanking activity?

Question145: Which of the following would NOT be acceptable under the Bank Bribery Act and the relevant guidelines?

Question146: Cassandra Phillips requested a loan to purchase a boat. She asked for $15,000 at 7.5 percent for seven years. The bank considered her request but decided, considering her income and credit history, the best offer of credit the bank could make was $10,000 at 8.25 percent for five years. Rhonda Mays, the loan officer, wrote a letter, setting forth the terms the bank could offer. The letter was mailed on July 1. Ms.
Phillips received the letter and began to look elsewhere for a loan on the terms and conditions she wanted.
Does the bank have any additional responsibility to Ms. Phillips?

Question147: Big Nationwide Bank has decided to close one of its smaller branches in Texas. A community association from the small town where the branch is located is not pleased with the decision because Big Nationwide's branch is the only financial institution in the small town. The community group complains to the federal agency that regulates Big Nationwide. What must Big Nationwide do in light of this protest against its decision to close the branch?

Question148: For HMDA purposes, the term "dwelling" does NOT include which of the following?

Question149: The sender agrees to indemnify each Reserve Bank for:

Question150: EFT provides consumers with limitations on liability for unauthorized electronic fund transfers. It includes the following types of funds transfers EXCEPT:

Question151: How must most banks submit loan application registers to their federal supervisory agencies?

Question152: When is it possible for a bank to be exempted from compliance with some of the Government Securities Act custodial regulations?

Question153: Which of the following banks CANNOT select Montana as its home state for deposit production purposes?

Question154: According to FDIC Guidance on Spousal Signature Provisions, if the creditor requires the spouse's signature on an instrument that imposes personal liability, the creditor's belief should be:

Question155: A routine review of account records reveals that suspicious activity involving foreign currency has occurred in the account of one of the bank's directors. Which of the following actions should be taken FIRST?

Question156: Regulation B defines "elderly" as having attained an age of how many years?

Question157: Unless the debt collector has express permission from the consumer or from a court, the law prohibits communication with a consumer under the following conditions EXCEPT:

Question158: Which of the following activities is permitted under ADA?

Question159: First National Bank would like to adopt a recordkeeping system that complies with the requirements of Regulation O.
Which of the following best describes the recordkeeping system required by Regulation O?

Question160: ABC National Bank regularly purchases mortgage loans from ACME Mortgage Company, a local mortgage broker. ACME places a mandatory arbitration clause in each of its mortgage documents. ACME believes this clause is necessary because of state laws governing arbitration. Is this clause a problem for ABC National?

Question161: The initial disclosure requires that certain disclosures relating to the termination of a lease be given to the consumer. Which of these disclosures is NOT required?

Question162: Under what circumstances will a G-FINW (a withdrawal as a government securities dealer) become effective in less than 60 days?

Question163: A bank received a signed letter criticizing its performance in meeting the credit needs of the community, but not adversely reflecting upon any individual bank employee's reputation. What must the bank do with this letter?

Question164: A bank may include all of the following in the narrative portion of its financial disclosure except for one.
Which of these pieces of information CANNOT be disclosed?

Question165: A bank has been criticized by an examiner for less than satisfactory CRA performance. The bank must show improvement in its commitment to CRA. For the examiner, what would be LEAST effective in demonstrating the change?

Question166: John and Elise Fernandez apply to ABC Bank for a loan to purchase a manufactured home. ABC Bank is a community bank with approximately $100 million in assets, and the home would be located outside of the bank's metropolitan area. Mr. and Mrs. Fernandez complete an in-person application for a mobile home that is denied by the bank due to insufficient income. Which piece of information on the Fernandez application is ABC Bank NOT required to report on its HMDA LAR?

Question167: Cash items' payment proceeds must be available to the Reserve Bank by the latest of:

Question168: When developing a training plan for commercial lenders, which of the following regulations is least important to include?

Question169: When all the required information is NOT provided by a person purchasing a cashier's check with $8,000 in currency, what should the bank do?

Question170: ___________ governs the collection of checks and other cash and noncash items and the handling of returned checks by Federal Reserve Banks. It also covers the rules governing funds transfers sent through the Fedwire. Its purpose is to provide rules for collecting and returning items and settling balances.

Question171: What information must be on the loan application registers for home loans on property located within the bank's metropolitan area?

Question172: A Reserve Bank may present a noncash item for payment if instructed to do so by the sender and if the:

Question173: Which of the following is NOT considered an acceptable form of identification for an individual when completing a CTR?

Question174: Several types of loan-related data appear in the following list. Which type of data is NOT required to be reported under HMDA?

Question175: Under the ADA, what can an employer do?

Question176: In evaluating a bank's CRA performance, to what do bank examiners give the greatest consideration?

Question177: ACME National bank uses telephone solicitations to sell its debt cancellation contracts. The banker explains to the borrower the nature of the contract, gives an oral short form disclosure, receives the customer's affirmative election orally, and sends the written long form disclosures and written affirmative election within three business days. Is the bank in compliance with the telephone solicitation rules as they apply to affirmative elections?

Question178: First National Bank has an employee benefit program whereby all bank employees who meet the bank's credit underwriting standards may obtain consumer loans for major purchases or expenses at a rate that is less than the bank's prime rate. Can the bank allow its executive officers to borrow under this program?

Question179: First National Bank has made a loan to Mr. Good, secured by margin stock, to purchase margin stock. He trades stocks frequently, makes substitutions on loan collateral regularly, and sometimes withdraws collateral and does not replace it. Must FNB ensure that margin requirements are met after every substitution and withdrawal?

Question180: For a U.S. bank with domestic and foreign locations, which transaction does NOT require an information return to report the amount of interest paid?

Question181: A recent audit revealed that the bank's personal trust division was failing to determine whether securities being accepted from new trust customers have been reported as lost or stolen. To address the root cause of this problem, what should the compliance officer do FIRST?

Question182: Implemented by _______________, EFTA is intended to provide certain rights to individual consumers using EFT payment systems. It also places responsibilities on financial institutions whose accounts are affected by EFTs.

Question183: Roberta Milton's car lease with First National Bank reached its termination on August 1. Roberta and the bank agreed to extend the lease on a month-to month basis without charging her a fee for doing so. What disclosure responsibilities does the bank have now?

Question184: For what do ECOA and Regulation B extend coverage?

Question185: Mills Company, Inc., is a manufacturing company with a working capital line of credit from First National Bank. The credit agreement governing the loan states that Mills cannot obtain additional unsecured credit without the approval of the bank. Mills believes that such a clause violates the Bank Holding Company Act's anti-tying clause. Does it?

Question186: A ____________ must settle for an item with its administrative bank, whether or not it received the item from that bank. Settlement with its administrative bank is deemed to be settlement with the Reserve Bank that sent the item.

Question187: First National Bank made the following loans to Mr. James Wilson during the previous calendar year:
* Loan A, made on February 2, is a loan for purchasing margin stock and is secured by margin stock
* Loan B, made on March 15, is also for purchasing margin stock and is secured by margin stock
* Loan C, made on June 30, is an unsecured loan for purchasing margin stock
* Loan D, made on September 10, is for purchasing a car, secured by the car All the loans are still outstanding at the end of the year. Which of the loans must be combined for purposes of the margin requirements of Regulation U?

Question188: What may a creditor do in response to an application for credit from a business with gross revenues of $1 million or less?

Question189: A consumer reporting agency may furnish a consumer report

Question190: What should a bank's Bank Secrecy Act compliance program include?

Question191: The following mentioned points are actually _______________.
* Reserve Banks may rely on numbers given in a payment order to identify an intermediary or beneficiary bank
* Reserve Banks, when acting as beneficiary's bank, may rely on the number in the payment order that identifies the beneficiary

Question192: First National Bank is a newly chartered bank. Which of the following security related procedures is NOT required under the Bank Protection Act?

Question193: An electronic image of an item together with electronic information describing that item in an approved format will be considered a valid instrument. Common forms of instruments are the following EXCEPT:

Question194: Which of the following is NOT a requirement of Regulation F?

Question195: On which of these loans does First National have to report the interest rate spread on its HMDA LAR?

Question196: Williams National Bank has its home office in New York State; however, it has branches in Nebraska. The federal banking agencies most recent host state loan to- deposit publication lists the loan-to-deposit ratio for Nebraska as 78 percent. For Williams Bank to pass the loan-to-deposit screen of the Reigle-Neal Act, what must its loan-to-deposit ratio be for Nebraska?

Question197: Which of the following are included in unfair practices during debt practices?

Question198: How is the maximum loan value of margin stock defined?

Question199: __________________ is a transfer that is authorized in advance to occur at substantially regular intervals.
Payments that require the consumer to take specific actions to initiate them (such as by entering instructions on a touch-tone telephone or on the Internet) are not such type of EFTs.

Question200: The Fair Credit Reporting Act (FCRA) became effective in 1971. The purpose of FCRA is to regulate:

Question201: Which of the following institutions is exempt from the coverage of CRA?

Question202: In which of the following situations does a bank need to post a branch closing notice?

Question203: Harvey Smith is a loan officer at First National Bank. Which of the following of Harvey's outside business interests may be considered to be a conflict of interest that should be disclosed to the bank?

Question204: Which of the following loans or applications is EXCLUDED from HMDA reporting?

Question205: Of the following types of data, which one is NOT required to be reported for each application for an originated loan subject to Regulation C?

Question206: A recent compliance review revealed that several branch officers are using obsolete loan application forms, which do not include disclosures related to credit insurance sales. Which of the following steps should be taken FIRST?

Question207: On which of the following loans must a bank maintain records under the Bank Secrecy Act?

Question208: Which of the following types of security devices is required for each bank, at minimum, under the Bank Protection Act?

Question209: What should a bank do when it receives a request from a customer to transfer funds to an individual in Iraq?

Question210: Records regarding compliance with Regulation M must be kept for how long?

Question211: A bank is planning to sell eight branches. The compliance officer participates on a bank committee to oversee the process. What should be the compliance officer's PRIMARY concern?

Question212: Which of the following institutions could be examined for CRA under the small intermediate bank performance standard?

Question213: Which of the following is NOT a written record the bank should retain in complying with the Bank Bribery Act?

Question214: First National is developing a consumer checking account that can access a line of credit. This is the first time the bank has ever had such a product, although this type of credit facility has been popular with other banks in town. To determine what interest rate to charge on this account, an officer of First National called some of his friends at other local banks offering this type of credit and asked several questions, including the interest rate charged on this type of account and what internal factors the banks use to set the rate.
After obtaining this information, First National determines that it could charge approximately 2 percent more than it originally planned. Is there anything wrong with this course of action?

Question215: For purposes of insider lending laws and regulations, what is the definition of the term executive officer?

Question216: Which of the following is the best method for a large bank to use in monitoring its CRA performance?

Question217: What are holders of unclaimed property required to do?

Question218: Of the following loans made by a national bank, which loan is NOT covered by the OCC ARM regulation?

Question219: What may a creditor do if an applicant applies for individual unsecured credit?

Question220: A subsidiary of First National Bank can legally participate in all but one of the following businesses. In which business may the subsidiary NOT legally participate?

Question221: In evaluating the coverage of a bank's Regulation U compliance for loans to purchase or carry margin stocks, which of the following securities is NOT covered in the regulatory definition of "margin stock"?

Question222: First National's consumer leasing department placed an ad in the local paper that pictured a car with the caption, "Sign a lease with us and pay only $275 per month." What other information must this ad have?

Question223: It is a corporation or a non-depository institution that maintains an account with a Reserve Bank

Question224: Which of the following loans is clearly NOT subject to the IRS mortgage interest reporting requirement?

Question225: ACME Bank would like its tellers to help sell insurance products to new and existing customers. The tellers would refer customers to personal bankers who have insurance licenses from the state. The bank would like to reward tellers by giving them a small percentage of the commission for each policy sold where the sale resulted from a referral. Which of the following statements presents ACME's biggest concern in complying with the Consumer Protection in Sales of Insurance regulation?

Question226: Any person in one of the following category can be debt collector:

Question227: Which of the following is NOT a requirement of CRA?

Question228: Creditors must retain for 25 months after the date that an offer of credit is made (12 months for business applicants with gross revenues of $1 million or less) the following items EXCEPT:

Question229: Which of the following is an accurate statement according to the requirements of the customer identification program regulations?

Question230: What may a creditor do when furnishing credit information?

Question231: ABC National Bank, an independent bank with $120 million in total assets located in a large urban area, is in the process of determining its option for its CRA evaluation. Which of the following options is NOT open to ABC Bank?

Question232: Which of the following actions is NOT an adverse action?

Question233: Roger Jameson is the head of the consumer loan department at First National Bank. He is a regular participant in a lending committee of a local finance trade association. The committee meets once a month at a local hotel. After the committee meetings, Roger and several other committee members who are officers at other banks in town go to a hotel restaurant and talk for a couple of hours before leaving. During these informal conversations Roger learned that the other members require the car dealerships in town that sell consumer installment contracts to the banks to refrain from selling them to local savings and loan associations. Roger believes that this is a good idea and would like to implement it at First National. Is there a problem with doing so?

Question234: For which of the following is a bank most likely to be in danger of receiving a cease and desist order?

Question235: First National Bank and Fidelity Bank are subsidiaries of Bank Holding Company, Inc. Fidelity is planning to sell First National two loan participations. It has been Fidelity's practice for several years to sell overlines to First National.
* Loan A has been on Fidelity's books for two years. It is a line of credit that will be over Fidelity's loan limit with its next advance. It was recently classified as special mention during a safety and soundness examination. First National agreed to purchase overlines on Loan A before Fidelity's funding of the loan two years ago and signed a participation agreement at that time.
* Loan B is 60 days past due for a principal payment, although interest payments are current. The loan has been on the books at Fidelity for one year. First National agreed to purchase overlines on Loan B six months ago. Which, if any, of these loans can First National purchase?

Question236: Your bank's president comes back from an industry conference and tells the compliance officer that she attended a presentation about OFAC. She heard the bank could be fined for not adhering to OFAC requirements. Thus, she has directed that every bank transaction be reviewed for OFAC compliance. What is the most appropriate statement the compliance officer could make to the bank president?

Question237: What is the longest time after board approval that a bank can approve a line of credit for an executive officer?

Question238: It is the policy of First Safe Bank to offer credit life insurance and accident and disability insurance to all consumer loan customers. What procedures fulfill the disclosure requirements for the bank?

Question239: A Reserve Bank makes the following warranties when it handles ___________:
* For all items, the Reserve Bank warrants that the returned checks bear all endorsements by all parties that previously handled the checks
* For all electronic items, the Reserve Bank warrants all of the
* Regulation CC warranties as though they were paper checks
* For electronic items that are not representations of substitute checks, the Reserve Bank warrants the following to the bank to which it sends the item:
(a) The electronic portion of the item accurately represents all of the information on the front and back of the check as of the time the check was truncated
(b) All MICR line information is contained on the item
(c) The item conforms to the technical standards set forth in the operating circular (d) No person will receive a transfer, presentment, or return, or otherwise be charged for the item such that the person will be asked to make payment based on an item he or she has already paid

Question240: In the small bank performance standard, which of the following is NOT a criterion?

Question241: Second State Bank offers a mortgage product that involves simultaneous second lien loans. These include a first lien for up to 90 percent of the purchase price and a second loan for the down payment, secured by a second lien on the property. The bank would like to be in full compliance with the Interagency Guidance on Nontraditional Mortgage Product Risks. Which of the following should Second State Bank incorporate into its loan program?

Question242: Which of the following is NOT a corporate practice required of bank holding companies?

Question243: What insurance disclosures are required in the lease disclosure statement?

Question244: On which of the following adjustable-rate loans must the bank use an index beyond its control?

Question245: When must disclosures on consumer leasing transactions subject to Regulation M be made?

Question246: A compliance officer is constructing a review of a transaction in which M, a deposit account customer, used cash to purchase travelers' checks in an amount of $4,000. The compliance officer must determine compliance with financial recordkeeping and currency reporting regulations. Which of the following pieces of information must be part of the bank's records for this transaction?

Question247: Which of the following institutions is NOT subject to the coverage of HMDA?
* Bank A, with assets of $55 million and located in a large urban city, makes home improvement loans and some home purchase loans to existing customers, but no mortgage loans.
* Bank B, with assets of $9 million and located in a rural area, has several branches, also in rural areas, including one that makes home improvement and home purchase loans.
* Mortgage Company C, with assets of $75 million and a home office in a large East Coast city, makes exclusively home purchase loans.

Question248: Which of the following is true of a bank's CRA strategic plan?

Question249: In a review of a bank's compliance with the Regulation O overdraft provisions, what should the compliance officer do?

Question250: Hector Martinez is a loan officer in a non-community property state. He receives a verbal request for a small business working capital loan from Leon Rogers for his technology consulting business. The business is a sole proprietorship. Mr. Rogers gives Hector a written business plan for his business, a financial statement for the business for the past two years, and a personal financial statement that includes information on himself and his wife. Can Hector assume that the application is a joint application from Mr.
Rogers and his wife?

Question251: First National Bank made a loan to a nonbank affiliate of its holding company that is secured by stocks, bonds, and debentures. At the outset of the loan, First National had collateral with a market value equal to
150 percent of the loan amount. Over time, some of the collateral has been retired and amortized. Some has dropped in value. What is the responsibility of the bank regarding the collateral?

Question252: ACME National Bank has a Web site that lists the bank's products and services. On its consumer loan page it lists debt cancellation contracts as an available product. What other disclosure must the bank place on this Web page?

Question253: The following statements make assertions about the collection and reporting of data on race, ethnicity, sex, and income. Which statement is false?