- •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?
12. What are areas of confidentiality? What is the function of them?
Areas of confidentiality - areas within a company where persons have access to inside information either regularly or on an ad hoc basis.
Implementation of areas of confidentiality must be in accordance with the size of the bank and the type, scope and complexity of its operations. It can be permanent or temporary (project-based). Information have to be documented in WRITTEN form
Function:
Permanently effective organizational and administrative arrangements are needed to avoid conflicts of interest and hence to avoid damage of the interest of customers.
Example: Managing Director of a traded company is a securities customer of a bank. Information by him to the account manager of the bank must not be shared with any other employee of the bank
=> Insider information
13. What is understood by compliance relevant information?
Inside information:
- It has to be of a precise nature and has not been made public;
- It must relate, directly or indirectly, to one or more issuers or to one or more financial instruments;
- It must be capable of having a significant effect on the price of a security were it to be published; - It has to be of such nature that an informed investor would probably make use of it, partly basing his investment decisions on it. The "public" in this case denotes the section of the public that is interested in stock market trading.
Other CO-relevant information: Price-Sensitive information (company data) Publication of information is capable to affect the price of the financial instrument
14. What is understood by insider trading and/or market manipulation?
Insider trading:
- Making use of inside information;
- with the intention of gaining a pecuniary advantage for oneself or for a third party;
- This also applies to secondary insiders: Persons who are not insiders themselves but knowingly exploit inside information which has been communicated to them or has otherwise been made known to them.
Market manipulation:
• Transactions or orders that - send or could send wrong or misleading signals - Influence the price in such a way that an abnormal or artificial level is achieved
- Increase demand => increase price
- False information on the true financial status - Pretence of false facts
- False/misleading information
- Etc
15. Explain the Watch List and the Restricted List!
The watch-list and restricted list are instruments for reportable information or operations, which include all Compliance Office relevant information (immediately and exclusively), Large-scale orders and front running and suspicion of insider trading.
The watch-list is constantly updated and the decision about included financial instruments is made by the compliance office. The list is confidential, purely internal and not accessible to the public. It is used to monitor financial instruments (e.g. of listed companies that are clients). If a financial instrument is on the watch-list, there are NO restrictions on trading or consulting. Employee transactions are generally permitted but can be cancelled ex post. A removal from the watch-list is only permitted if the compliance-relevant information has been accessible to the public or has been proven to be irrelevant. A transfer to the restricted list is possible.
The restricted list serves as protection against insider transactions and giving bad advice. The list is strictly confidential and can be company-wide or selective for defined organizational units or persons. A removal from the list is only possible if the compliance-relevant information has been accessible to the public or has been proven to be irrelevant. Employee transactions are not permitted if employees have been informed and consulting or recommendations are also not allowed. The list is constantly updated and monitored by the compliance office.