30 Questions
What is the purpose of the Bank Secrecy Act (BSA)?
The BSA aims to facilitate the investigation of cases of suspected money laundering, fraud, and other illegal financial activities.
What is required of each bank in relation to the BSA/AML compliance program?
Each bank must establish a BSA/AML compliance program that includes procedures for detecting, preventing, and responding to identity theft and suspicious activities.
When do banks file Suspicious Activity Reports (SARs)?
Banks file SARs when they detect known or suspected criminal violations or suspicious transactions related to money laundering.
What is emphasized by the BSA in terms of customer relationships?
The BSA emphasizes assessing customer relationships and conducting due diligence based on risk.
What are some of the key recordkeeping requirements for entities subject to the BSA?
Entities subject to the BSA must maintain proper records.
How does the Red Flags Rule contribute to safeguarding sensitive information?
By adhering to the Red Flags Rule, organizations contribute to safeguarding sensitive information and maintaining the integrity of financial transactions.
What is the purpose of TRID?
TRID aims to create a more consumer-friendly mortgage process by ensuring borrowers receive clear and accurate information about loan terms and costs.
What are the two key forms introduced by TRID?
The two key forms introduced by TRID are Loan Estimate and Closing Disclosure.
How do Loan Estimate and Closing Disclosure forms help borrowers?
These forms help borrowers understand their mortgage terms and compare offers from different lenders.
What does TRID regulate in relation to lenders' fees?
TRID regulates lenders' fees to ensure transparency and prevent hidden fees or surprises for borrowers.
Which types of loans are covered under TRID regulations?
TRID rules apply to mortgages used for purchasing or refinancing residential properties, as well as construction-only and construction-permanent loans.
What is the significance of TRID for borrowers as the mortgage matures?
TRID prevents hidden fees and surprises for borrowers as the mortgage matures.
What is the main purpose of Regulation N?
To enhance transparency and accuracy in mortgage advertising.
Who does Regulation N apply to?
Persons over which the Federal Trade Commission (FTC) has jurisdiction under the Federal Trade Commission Act.
Define 'Commercial Communication' as per Regulation N.
Any written or oral statement, illustration, or depiction designed to effect a sale or create interest in purchasing goods or services related to mortgages.
Who is considered a 'Consumer' under Regulation N?
A natural person to whom a mortgage credit product is offered or extended.
What does 'Dwelling' refer to in Regulation N?
A residential structure containing one to four units, including individual condominium units, cooperative units, mobile homes, manufactured homes, or trailers used as residences.
Why are certain representations related to mortgage credit products prohibited in advertising according to Regulation N?
To prevent misleading or deceptive practices in mortgage advertising.
What types of financial institutions does the Safeguards Rule apply to?
Financial institutions subject to the FTC’s jurisdiction and not under the enforcement authority of another regulator under section 505 of the Gramm-Leach-Bliley Act.
What is required of covered financial institutions under the Safeguards Rule?
They must develop, implement, and maintain an information security program with administrative, technical, and physical safeguards.
What approach does the Safeguards Rule emphasize when assessing customer relationships?
The rule emphasizes a risk-based approach.
When were the 2021 amendments made to the Safeguards Rule?
The amendments were made in 2021.
Give examples of financial institutions that fall under the Safeguards Rule.
Examples include mortgage lenders, payday lenders, finance companies, and investment advisors.
Under what Act is the Safeguards Rule established?
The Safeguards Rule is established under the Gramm-Leach-Bliley Act.
What federal agency do state regulators collaborate with to harmonize regulations and enhance consumer safeguards?
Consumer Financial Protection Bureau (CFPB)
What role do state mortgage regulatory agencies play in the mortgage industry?
Maintain a safe and sound mortgage industry while safeguarding consumer rights
What is the purpose of the Nationwide Multistate Licensing System (NMLS)?
Official system for companies and individuals seeking to apply for licenses, amend existing licenses, renew licenses, or surrender license authorities
How many state or territorial governmental agencies manage NMLS?
66
What types of licenses are managed by NMLS for nonbank entities?
Money services businesses and consumer finance companies
How many state agencies use NMLS for mortgage licensing?
59
Test your knowledge on the Safeguards Rule which applies to financial institutions subject to the FTC’s jurisdiction under the Gramm-Leach-Bliley Act. Learn about the coverage and examples of financial institutions falling under this rule.
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