- •Compliance Sample Questions – Final Exam
- •1. Briefly explain financial stability and its importance to shareholders, depositors, taxpayers etc.!
- •2. Briefly explain goals, tasks and enforcement powers of banking supervisors!
- •3. Briefly give an overview of the European and the Austrian banking supervisors: Name them Their roles and tasks Cooperation between European and Austrian banking supervisors
- •4. Briefly explain the function of the Banking Union and the Single Resolution Mechanism (srm/ssm)!
- •5. Briefly explain significant banks and name some of Austrian significant banks!
- •6. Briefly explain the system of the Austrian (national) banking supervision system!
- •7. Name and briefly explain the roles of external banking supervisors and internal control authorities (within banks)!
- •9. Briefly explain the role of Compliance within a bank:
- •10. Briefly explain the Standard Compliance Code!
- •11. Name essential aspects/topics regulated in the Compliance Manual!
- •8. Briefly explain the 3 lines of defense!
- •12. What are areas of confidentiality? What is the function of them?
- •13. What is understood by compliance relevant information?
- •14. What is understood by insider trading and/or market manipulation?
- •Insider trading:
- •15. Explain the Watch List and the Restricted List!
- •16. Briefly explain Front Running!
- •17. What does a bank employee have to do in case of knowledge of compliance relevant information?
- •18. Briefly explain the tasks of a bank employee in case of employee transactions (he/she wishes to trade securities)!
- •19. What are the tasks of bank employees who work in areas of confidentiality in case of employee transactions (he/she wishes to trade securities)!
- •24. Briefly explain different types of corruption!
- •25. Why is it important to know if a person is engaged in the private sector or if a person is a public official (in the context of combating corruption)?
- •26. How are banks combating corruption? Why and what are there different internal regulations in case private sector or public officials?
- •27. Briefly explain Money Laundering and Terrorism Financing!
- •28. Briefly explain the 3 steps of Money Laundering!
- •29. Briefly explain some of the risks factors in order to identify Money Laundering and/or Terrorism Financing!
- •34. Name situations when a Know-Your-Customer (kyc) check is not necessary!
- •35. Briefly explain prohibited business relations!
- •36. What are the main tasks of the money laundering officer within a bank?
- •37. Give a detailed overview of steps/requirements by a bank employee in order to fulfill the rules of conduct (§ 38-62 ssa)!
- •38. Which information a bank is to give to its customers to fulfill the rules of conduct?
- •39. Explain the different customer definitions and explain the consequences of the customer classification in order to fulfill the rules of conduct!
- •40. For which customers a bank must prepare a customer profile? Which information does a bank employee need to prepare the customer profile? What are the consequences of a customer profile?
- •41. Explain the differences of transactions requiring advisory/clarification and transactions without advisory/clarification!
- •42. Briefly explain the requirements for the execution of orders by retail customers? What is understood by Best-Execution-Policy?
- •43. Is doorstep selling allowed in Austria?
- •44. Explain and give examples of essential risks regulated in the ssa (in context with securities business)!
- •45. Explain essential differences of the roles and tasks of internal auditors and external auditors!
- •Internal Audit
- •46. Name essential stakeholders of the internal audit function! Explain the interaction between them and the internal audit function!
- •47. Briefly explain the steps of audit planning (internal audit): Risk based planning versus mandatory audit fields!
- •48. Briefly explain Material Misstatement and possible consequences thereof!
- •49. Explain Audits risks and how external auditors can mitigate them!
- •50. Explain the 4 types of (external) Audit Opinions! Which type do banks require for assessing the credit risks of customers?
27. Briefly explain Money Laundering and Terrorism Financing!
Money Laundering:
-Legal sources:
•EU-Directive 2005/60/EC 2006/70/EC on the prevention of the use of the Financial System for the purpose of Money Laundering and Terrorist Financing
•Austrian Banking Act §40ff
•FMA Regulation on AML & TF
•Criminal Act
-Definition:
Money Laundering is an inward transfer of illegally obtained funds/assets into the legal financial and economic cycle resp. the process of transforming the proceeds of crime and corruption into legitimate assets. These illegal funds are the proceeds activities of criminal activities (e.g.: drug trafficking, arms trafficking, human trafficking) or are intended to support criminal behavior.
In other words, it can be seen as proceeds from illegal activities to disguise the illegal source of money by purpose.
Terrorism Financing:
-Legal source:
•§ 278d Austrian Criminal Act
-Definition:
Granting or collection of illegal money for terrorist acts resp. financing or financial support to individual terrorists or terrorist groups.
-Examples:
Aircraft hijacking, kidnapping etc.
28. Briefly explain the 3 steps of Money Laundering!
The 3 steps are: Placement, Layering and Integration.
-Placement:
Illegally obtained money will be channeled into the financial- and economic cycle. This takes place in small or larger partial amounts in e.g.: casinos, horse races, luxury hotels, exchange houses, deposits on bank accounts for the purchase of short-term saleable goods (securities, luxury goods).
-Layering:
Disguising the source of funds --> money is routed through several accounts and the criminal origin is not traceable;
cover the tracks, media for disguising the source of funds are f.e.: dummy transactions with offshore companies or offshore banks;
-Integration:
Origin of the funds is not identifiable any longer, the laundered funds are used for legal business activities e.g.: investments of company shares, real estates, life insurances etc.
29. Briefly explain some of the risks factors in order to identify Money Laundering and/or Terrorism Financing!
•Client behavior (no clear motive and profound justification, unusual procedures, attempts to induce the account manager to commit a breach of duty, provides false, misleading or contradictory information, refuses to provide necessary, avoids personal contact does not wish to get account statement sent by post)
•Payment reason
•Turnover (high value of transactions from offshore companies within a short period of time, in short time period high cash deposits and transfer to unusual destinations, high cash transactions in the interest of a third party, larger quantity of money is deposited in cash with small banknotes (through unknown depositor), large cash drawings)
•Transactions (Frequency, Type or Volume of Transactions, structure of transaction illegal / from economic view illogical, payment reason of transaction is not significant or even missing) high value of transactions from offshore companies within a short period of time
•Investments (customer wants to buy securities against cash or cheques, incoming payments from risk countries and purchase of securities. opening of securities account and at the same time hiring a bank deposit safe, securities from issuers or drawee from high risk countries)
•Financing (origin of the collateral is not clear, opening of multiple accounts for cash cover as underlying incoming payments with the payment reason, refund the loan before maturity after a short period of time, involvement of offshore banks)
30. Which actions should a bank employee take in case of suspicion of Money Laundering and/or Terrorism Financing?
File a notice of suspicion due to cases of money laundering and/or fraud to CO immediately (CO examines the facts and decides on the further procedure : Termination or continuation of business relationship), Non-disclosure of suspicion towards the customer
31. Explain essential measures that banks take in order to prevent Money Laundering and Terrorism Financing (risk based approach, customer file, KYC checks, necessary documents etc.)! Private/retail customers Corporate customers incl. their representatives (acting in the name of the corporate)
- Scoring Costumers/Products/Countries with a Risk-Matrix
- Based on that Risk classification doing Due Dilligents
- Creating a Costumer File
- Monitoring Transaction
Documents:
Personal identification (passport etc)
Statement of beneficial owners
Entitlement to execute banking business
32. Explain in detail the steps a bank employee should do in case a new customer wants to open an account with the bank! In case of low risk transactions In case of high risk transactions in case of standard risk transactions
low/standard
creating Customer File
AML risk classification
(Obtaining of the beneficial owner data)
Ongoing monitoring of business relation
Risk analysis of transaction
high risk
Compliance check by CO incl. verification of beneficial owner data
Monitoring of the ongoing business relationship
Update of the customer data (annual)
33. Briefly explain politically exposed persons, beneficial owners and authorized representatives!
Politically exposed Persons:
natural persons or immediate family members/persons known to be close associates who hold the following offices: heads of state, members of parliaments, members of the court, executive or supervisory board of state-owned enterprises
Beneficial Owner:
Natural persons, whose ownership/control is > 25% of the client
Authorized representatives:
Those representatives have the entitlement to execute banking business in the name of the customer