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
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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.
When a bank is cited for a regulatory violation, the compliance professional must first determine whether the bank should agree with it. This is done by reviewing the pertinent regulations and affected materials. If the citation is supported by the regulations, then the compliance manager should discuss it with the marketing manager. Solutions may include training marketing personnel or establishing new policies for reviews.
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.
If the compliance professional agrees with the regulators on a finding, the root cause of the error must be determined by consulting policies and procedures. There is no benefit to conducting a risk assessment because the issue is known. After determining the cause, then the extent of the problem must be determined. Only after gathering this pertinent information can the compliance professional write an analysis for management explaining the situation
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.
When implementing new rules, it is beneficial to start with a task force of affected managers that can make decisions about how to implement the new rule. The other actions would eventually become necessary, but it would be timelier to write the new policy and then develop training only after the compliance professional has a clearer idea of needed actions. Talking to the bank president about resources would not be helpful to implementing new legislation, unless it can be shown as necessary to complying as the business units have chosen.
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.
This proposed change is important to the bank. The compliance professional should first analyze its effect and provide that summary to the affected business units, and then establish a task force to study the proposal. Contacting the vendor may be part of the risk considered by the task force.
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