#1
Which of the following is a common financial risk faced by banks?
All of the above
ExplanationBanks face credit, market, and liquidity risks.
#2
What is the primary purpose of financial risk management in banking?
To minimize the impact of risks
ExplanationFinancial risk management aims to reduce adverse effects of risks.
#3
Which of the following is NOT a type of market risk faced by banks?
Credit risk
ExplanationCredit risk is not a market risk.
#4
What is the purpose of stress testing in financial risk management?
To measure the bank's ability to withstand adverse economic conditions
ExplanationStress testing assesses a bank's resilience to economic shocks.
#5
What is the main objective of liquidity risk management in banking?
To ensure sufficient funds are available to meet obligations
ExplanationLiquidity risk management ensures availability of funds for obligations.
#6
Which of the following is NOT a factor contributing to operational risk in banking?
Market volatility
ExplanationMarket volatility is not a component of operational risk.
#7
Which of the following is NOT a typical component of a bank's anti-money laundering program?
Risk-taking
ExplanationRisk-taking is not a part of anti-money laundering efforts.
#8
Which regulatory body is primarily responsible for overseeing anti-money laundering efforts in the United States?
IRS (Internal Revenue Service)
ExplanationThe IRS oversees anti-money laundering efforts in the US.
#9
Which of the following is a key principle of an effective anti-money laundering program?
Enhanced due diligence
ExplanationEnhanced due diligence is crucial for anti-money laundering.
#10
What is the role of a compliance officer in the context of anti-money laundering?
To ensure adherence to anti-money laundering regulations
ExplanationCompliance officers ensure compliance with anti-money laundering laws.
#11
What is the purpose of a risk assessment in the context of anti-money laundering?
To identify potential money laundering activities
ExplanationRisk assessments detect possible money laundering.
#12
Which of the following is NOT a characteristic of a suspicious transaction?
Known legitimate source
ExplanationA known legitimate source is not characteristic of a suspicious transaction.
#13
Which of the following techniques is commonly used by money launderers to conceal the origin of illicit funds?
Structuring
ExplanationStructuring hides the source of illicit funds.
#14
Which of the following is a characteristic of the 'layering' stage in the money laundering process?
It focuses on concealing the source of funds
ExplanationLayering obscures the origin of illicit funds.
#15
Which of the following is a primary method for banks to identify and verify customers for anti-money laundering purposes?
Know Your Customer (KYC)
ExplanationKYC is a primary method for customer identification.
#16
What is the primary function of a risk management committee in a bank?
To oversee the implementation of risk management policies and procedures
ExplanationThe committee ensures proper execution of risk management strategies.
#17
Which of the following is a common method for banks to mitigate operational risk?
Outsourcing critical functions
ExplanationOutsourcing helps mitigate operational risk in banks.