Question 1

Issuing Bank, a foreign bank, maintains an account with First National Bank, a U.S. bank. Issuing Bank issues a letter of credit in favor of ABC, Inc., a U.S. corporation. The letter of credit contains a boycott provision. The letter of credit provides that any negotiating bank may obtain reimbursement from Issuing Bank's account at First National Bank by certifying that the conditions of the letter of credit have been met. Issuing Bank does not send First National Bank a copy of the letter of credit. May First National Bank reimburse negotiating banks for the letter of credit when it contains a boycott provision?

Accepted Answer

The answer of Issuing Bank, a foreign bank, maintains an...

Question 2

An institution must take steps to determine that information is lawfully made available to the public, including a determination:

Accepted Answer

The institution must ensure that the information is the type that is generally available to the public (B) and verify whether the individual has the right to opt-out of having their information made public, and if they have not exercised that right (C).

Question 3

During a EFT, if the institution determines that no error has occurred or that an error occurred in a manner or amount different than the alleged error, it:

Accepted Answer

The answer of During a EFT, if the institution determines...

Question 4

In _______________, Congress enacted restrictions on the way financial institutions disclose information on customers to third parties. The law also requires financial institutions to provide disclosures, both at the time of establishing the customer relationship and annually thereafter.

Accepted Answer

The Gramm-Leach-Bliley Act of 1999 requires financial institutions to explain their information-sharing practices to their customers and to safeguard sensitive data.

Question 5

It means a direction by the consumer that the financial institution not discloses nonpublic personal information about the consumer to a non-affiliated third party, except as permitted by the regulation. What is it?

Accepted Answer

The given definition is describing the opt-out provision, which allows a consumer to instruct the financial institution to not disclose their nonpublic personal information to a non-affiliated third party. Re-disclosure and non-affiliated are not relevant to the given information.

Question 6

Payroll card accounts established directly or indirectly by an employer for the purpose of electronically transferring an employee's wages, salary, or other compensation on a recurring basis, are covered by:

Accepted Answer

Payroll card accounts established by an employer for the purpose of electronically transferring an employee's wages are covered by Regulation E, which governs electronic fund transfers.

Question 7

First National Bank opened a letter of credit in favor of ABC Co., a U.S. company, for ABC's sale of goods to Country X, a foreign country that participates in a boycott. The letter of credit contains no boycott provisions, but First National Bank knows that ABC Co. has agreed to supply a certification to Country X that ABC has not dealt with any blacklisted firms as a condition of receiving the letter of credit in its favor. What should First National Bank do?

Accepted Answer

First National Bank should not implement the letter of credit because they know that ABC Co. has agreed to supply a certification to Country X that ABC has not dealt with any blacklisted firms. This means that ABC Co. may violate the anti-boycott regulations, and First National Bank could potentially be liable for participating in the boycott. Therefore, it is best for the bank not to implement the letter of credit.

Question 8

Following institutions comes under the heading of ________________: • Institutions subject to the commodity Futures Trading Commission • The Federal Agriculture Mortgage Corporation or institutions charted and operating under the Farm credit Act • Institutions charted by Congress to engage in securitizations, secondary market sales, or similar transactions, provided that the institution does not sell or transfer nonpublic personal information to nonaffiliated third parties

Accepted Answer

The answer of Following institutions comes under the heading of...

Question 9

Consumers are not considered to be the customers if they do not have continuing relationship with the financial institution. A relationship is considered NOT to be a continuing relationship if:

Accepted Answer

The answer of Consumers are not considered to be the...

Question 10

The OCC has determined that a national bank may not assume that, simply because a consumer's PIN or ATM card was used in a transaction, that transaction is authorized. Banks are required to take reasonable steps to determine whether the transaction was authorized. Such steps might include the bank's review of:

Accepted Answer

Both choices A and B are reasonable steps for a bank to take in order to determine whether a transaction was authorized. Documentation or written statements provided by the consumer can help confirm that the transaction was authorized, while historical information on the customer's pattern of use can help identify any unusual activity or potential fraud. Choice C, problems reported by regular customers, may be useful in identifying issues with access devices or ATMs, but may not necessarily help in determining whether a specific transaction was authorized. Choice D, legal reports, may be helpful in cases of suspected fraud, but is not a practical step for a bank to take in every transaction.

Question 11

To stop a payment of a preauthorized transfer, consumer must notify the institution or in writing at least:

Accepted Answer

According to Regulation E, the consumer must notify the institution at least three business days before the preauthorized transfer is scheduled to occur in order to stop the payment. It is important to note that this does not apply to one-time electronic transfers or payments.

Question 12

First National Bank, a U.S. bank, is contacted by Manufacturing Company, Inc., a U.S. company, to finance its transaction with Country Z, a boycotting country. Payment will be made through a letter of credit in favor of Manufacturing Company at its U.S. address. First National Bank knows that the letter of credit will contain restrictive boycott conditions that would prevent the bank from implementing it. First National Bank suggests to Manufacturing Company, Inc., that it set up a shell corporation in Country Y, a nonboycotting country, and have the shell corporation be the beneficiary of the letter of credit. Does First National Bank have any problem with this transaction?

Accepted Answer

First National Bank is aware that the transaction is intended to evade the regulations against doing business with boycotting countries, and therefore facilitating this transaction would make them liable for violating these regulations. Simply suggesting the creation of a shell corporation in a nonboycotting country does not absolve the bank of its responsibility to comply with U.S. law.

Question 13

Country A (a foreign country that is boycotting Country B, another foreign country) has ordered goods from ABC, a U.S. corporation. Country A has opened a letter of credit with Overseas, Inc., a foreign bank. The letter of credit specifies that ABC must certify that it does not do business with Country B. Overseas, Inc., sends a telegram to First National Bank, a U.S. bank, stating the major terms and conditions of the letter of credit and asking First National Bank to confirm the letter of credit. The telegram does not state the boycott provisions. Overseas mails the letter of credit to First National Bank and asks First National Bank to confirm it. What may First National Bank do?

Accepted Answer

Since the letter of credit contains a boycott provision, First National Bank should not confirm it as it violates U.S. law against participating in boycotts. Instead, the bank should advise ABC of the letter of credit and administer its disposal. Additionally, the bank must report the letter of credit to the Department of Commerce and the IRS.

Question 14

A financial institution may provide a customer with a short form initial notice at the same time as it delivers an opt-notice. The short form notice must:

Accepted Answer

The short form notice must be clear and conspicuous, state that a privacy notice is available upon request, and explain how the consumer can obtain the full notice.

Question 15

The institution need not provisionally credit the consumer's account if it requires but does not receive written confirmation of oral notice of error or if the error involves an account subject to the margin requirements of ______________.

Accepted Answer

According to Regulation E, if the error involves an account subject to the margin requirements of Regulation T, the institution need not provisionally credit the consumer's account. Additionally, if the institution requires but does not receive written confirmation of oral notice of error, it also does not need to provisionally credit the account.

Question 16

As an alternative to providing a periodic statement, a financial institution holding payroll card accounts may make available:

Accepted Answer

A financial institution holding payroll card accounts may make available the account balance, accessed through a readily available telephone line (A) and an electronic history of the account that covers a period of at least 60 days preceding the time the consumer electronically accesses the account (B).

Question 17

Annual privacy notices are not required to be given to former customers, including cases where:

Accepted Answer

The answer of Annual privacy notices are not required to...

Question 18

Initial privacy notice-12CFR332.4; 12CFR40.4; 12 CFR 216.4; 12 CFR 573.4 says that:

Accepted Answer

All of these options are correct statements related to the initial privacy notice requirements under the specified regulations. The notice must be given before any disclosure of nonpublic personal information to a nonaffiliated third party, unless the disclosure is exempt. A notice is not required for non-customers if no nonpublic personal information is disclosed. Only one notice is needed for joint accounts, even if there are multiple borrowers or guarantors.

Question 19

Non public personal information under Regulation P includes:

Accepted Answer

Non public personal information under Regulation P includes both B and C, which are any list or grouping of consumers that is derived using personally identifiable financial information that is not publicly available and federal, state, and local government records. Personally unidentifiable financial information is not considered non-public personal information under Regulation P.

Question 20

Following mentioned are the responsibilities of: 1. Must notify the bank, either orally or in writing, of error within 60 days: • Of the institution's transmission of a statement or other documentation on which the error first appears or • Of receiving additional information or clarification provided pursuant to the consumer's request 2. Consumer's notification should include the following items • Consumer's name and account number or information that allows the institution to identify the consumer's name or account number • Consumer's belief and reasons for the belief that an error exists and, if possible, the type, date, and amount of the error (this information does not have to be given if the consumer is simply requesting further information or clarification)

Accepted Answer

These responsibilities are related to the consumer's rights and obligations under the Electronic Fund Transfer Act (EFTA) and Regulation E. The consumer is required to notify the bank of any errors in their electronic transactions within 60 days and provide specific information to identify the error.

Exam 1: Certified Regulatory Compliance Manager