Pre-Test

Question 1

Ms. Jones writes a check to Mr. Smith. In the check payment system, what role do each of them play

Answer 1

Ms. Jones=Payor; Mr. Smith=Payee

Question 2

What term describes the amount and type of risk an organization is willing to assume to meet its strategic goals

Answer 2

Risk Appetite

Question 3

According to the FFIEC’s Business Continuity Planning booklet, how often should a financial institution’s enterprise wide BCP test be conducted?

Answer 3

At least every 12 months

Question 4

Which regulation establishes reserve requirements for depository financial institutions?

Answer 4

Regulation D

Question 5

Which payment system requires participants to comply with PCI DSS requirements

Answer 5

Card

Question 6

Whish Federal Reserve Bank service allows for the electronic issuance, transfer, and maintenance of securities issued by the U.S. Treasury and federal government agencies

Answer 6

Fedwire Securities Service

Question 7

The inability or unwillingness of one fund transfer system participant to settle its commitments causing other participants to be unable to settle their commitments is known as

Answer 7

Systemic Risk

Question 8

Which ACH participant is required under the NACHA Operating Rules to conduct a risk assessment

Answer 8

RDFI

Question 9

A financial institution’s internal controls should include segregation of duties for critical/sensitive tasks be separate and assignments rotated when trying to mitigate

Answer 9

Frad Risk

Question 10

What should be included in an Internet Banking Policy

Answer 10

Encryption Standards

Question 11

Technical disruptions or human error are considered

Answer 11

Operational Risk

Question 12

Which regulatory body requires an RDFI to perform a review of all parties to an IAT entry including remittance and foreign correspondent bank information found in the Addenda Records

Answer 12

OFAC

Question 13

Like any other audit process, financial controls should be graded using what 3 categories

Answer 13

Weak, Moderate, & Strong

Question 14

If the Beneficiary’s account is held outside the Originator’s institution, the parties will complete the wire transfer by use of a payments system such as:

Answer 14

Fedwire Funds Service

Question 15

Which of the following should be identified in a financial institution’s BSA/AML Policy?

Answer 15

Designated BSA/AML Compliance Officer

Question 16

XYZ Gym sent an ACH file to debit its customers and then goes out of business a day later. The ODFI is now receiving return items for the gym. What type of risk does this represent

Answer 16

Credit Risk

Question 17

Which regulation governs check collection and funds transfers through the Federal Reserve?

Answer 17

Regulation J

Question 18

An example of authentication method of something a person has

Answer 18

Virtual Token

Question 19

What is one of the steps included in a Business Impact Analysis (BIA)

Answer 19

Identifying potential impact of business disruptions

Question 20

Which payment system processes federal funds purchases, corporate payments, and other large value payments

Answer 20

Funds/Wire Transfer System

Question 21

What is one way to address operational risk

Answer 21

Restricting activity with dual controls

Question 22

Which Act established the CFPB and UDAAP

Answer 22

Dodd-Frank Act

Question 23

What is one activity that an FI should have written procedures for

Answer 23

Account opening

Question 25

A voluntary private-sector organization dedicated to improving the quality of financial reporting

Answer 25

Committee of Sponsoring Organizations (COSO)

Question 26

Which policy or procedure outlines the documentation required from customers at account opening

Answer 26

Customer Identification Program

Question 27

When does the authorization and clearing take place of a single-message card payment transaction

Answer 27

At the time or purchase

Question 28

Allowing a Third-Party Sender to send files directly to the ACH Operator increases an ODFI's exposure to what

Answer 28

Fraud Risk

Question 29

Who is responsible for providing direction, establishing corporate management related policies and assistance to the CEO in guiding an organization

Answer 29

Board of Directors

Question 30

Which payment system is a processing and delivery system that provides for the distribution and settlement among FI's of electronic credits and debits, non-monetary entries, and payment related information

Answer 30

ACH

Question 31

An FI fails to send a wire transfer on behalf of the account holder before the Fedwire Funds Service closes. What two types of risk is the FI now exposed to

Answer 31

Operational & Reputational

Question 32

Which federal regulation provides consumer protections related to electronic funds transfers

Answer 32

Regulation E

Question 33

What is one example of an environmental control that could be used to securely store data

Answer 33

Fire protection

Question 34

What step in the development process of a business continuity plan (BCP) involves assessing and prioritizing all business functions and processes

Answer 34

Business Impact Analysis (BIA)

Question 35

A credit card issuer failed to disclose the maximum interest rates to the cardholder. What type of risk does this represent

Answer 35

Compliance Risk

Question 36

What is a component of internal control under the COSO ERM integrated framework

Answer 36

Risk Assessment

Question 37

What 2 risks are greater for ODFI's than RDFI's

Answer 37

Fraud and Credit

Question 38

Financial institution that represents Merchants in accepting POS transactions

Answer 38

The Acquirer in the Card Payments System

Question 39

Sally entered her logon ID and password to access her checking account via online banking. What type of authentication is being used

Answer 39

Single-factor Authentication

Question 40

What type of risk occurs when there is movement of fraudulent payment transactions from one payments channel to another

Answer 40

Cross-Channel Risk

Question 41

An FI restricted access to its wire operations area to only those personnel responsible for processing wire transfers. What type of security controls do they have in place

Answer 41

Physical controls

Question 42

Which RDC implementation represents the least risk and complexity to an FI

Answer 42

Branch Capture

Question 43

An Originator duplicates an ACH credit file, and then initiates a reversing debit file outside of the established timeframe within the NACHA Operating Rules. Several debits are returned NSF. What 3 types of risk are present?

Answer 43

Operational, Compliance, & Credit

Question 44

Jack authorized the Water Dept to debit his account for his monthly bill. What role do Jack and the Water Dept play in the ACH transaction

Answer 44

Jack=Receiver; Water Dept=Originator

Question 45

An RDFI fails to transmit an ACH return so that it is available to the ODFI within the established timeframes under the NACHA Operating Rules. What type of risk does this represent

Answer 45

Compliance Risk

Question 46

Which set of rules defines a commercially reasonable security practice

Answer 46

UCC Article 4A

Question 47

Bill accesses his FI's online banking service by entering his username and password along with a token he receives via text message. What type of multifactor authentication is this an example of

Answer 47

Out-of-band authentication

Question 48

Controls that align with a Board-approved risk appetite and inform employees of management's expectations are known as

Answer 48

Administrative Controls

Question 49

Duplicate presentment of checks and images at an FI represents what 2 types of risk

Answer 49

Operational & Fraud

Question 50

According to the FFIEC Business Continuity Management booklet, which entities govern an FI's business continuity

Answer 50

Senior Management and the Board