- •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?
16. Briefly explain Front Running!
Front running can be explained by an example: You know that your customer will place a large order so that the price of the share will probably increase. Front running would be that you place an order before your customer places its order so that you profit from the increase of the share price.
17. What does a bank employee have to do in case of knowledge of compliance relevant information?
Once the employee received compliance relevant information, he/she must inform compliance officer and receive instructions what actions needs to be done (if any).
At the same time the employee must stick to Areas of Confidentiality rules and follow the procedures/rules described in the relevant internal Compliance Manual.
18. Briefly explain the tasks of a bank employee in case of employee transactions (he/she wishes to trade securities)!
In case the bank employee wants to trade securities, first he/she needs to obtain positive compliance statement, confirming ability to perform such operations.
Compliance checks if the transaction meets the requirements of Employee Transactions described in the internal Compliance Manual, and if potential Conflict of Interests might occur in the result of such transactions (for instance, making use of inside information with the intention of gaining a pecuniary advantage for oneself or for a third party, proprietor trading) etc.).
Employee transactions must not be performed:
contrary to the interests of the bank or the customers (e.g. Front Running)
that would either demand or accept benefits or other Inducements in order to generate a profit from price differences resulting at very short notice (day trading)
which are out of proportion to their income and property
Employee transactions are only allowed if sufficient funds (e.g. backed by positions in securities) are in the account or within the credit lines previously granted to the employee.
All employees working in areas of confidentiality must, on their own initiative, report to the Compliance Officer any employee transactions which they have concluded with institutions other than the own bank. Such trades must be reported to the Compliance Officer promptly but no later than on the bank working day following the placing of the order
Transactions in the shares equivalent securities and all derivatives of the own bank always must be reported to the Compliance Office in advance.
Employees in areas of confidentiality are prohibited from employee transactions in securities of companies to which they have a particularly close relationship on account of their
Activities. Such employees have Pre - Clearance Duties.
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)!
Answer: All employees working in areas of confidentiality must, on their own initiative, report to the Compliance Officer any employee transactions which they have concluded with institutions other than the own bank. Such trades must be reported to the Compliance Officer promptly but no later than on the bank working day following the placing of the order. Employees in areas of confidentiality are prohibited from employee transactions in securities of companies to which they have a particularly close relationship on account of their activities. Such employees have Pre-Clearance Duties.
About employee transactions. These are transactions which management bodies or employees perform outside of their official duties: for their own account; in the name and/or for the account of third parties; In the interest of third parties; by third parties in the name and/or for the account of employees. They are excluded from personal transactions or performed under portfolio management agreement (with restrictions) with shares of investment funds. Relevant persons (employees) are (defined in section 1 sup-para. 29 of the Austrian Securities Supervision Act 2007) are Employees; Management bodies; Agents bound by contract
Disclosure of Bank Accounts and Securities Accounts of banks other than the own to the Compliance Officer (all employees) : •Report in written form ; •Release from banking secrecy
20. What are the tasks of the compliance in case of employee transactions and in case of compliance relevant information?
First of all, compliance should monitor employee transactions in advance. Generally, trading of financial instruments of the Watch List is permitted but the bank reserves the right to restrict employee transactions or to cancel them after they have been effected. As for restricted list, employee transactions are not permitted if employees have been informed
21. Give examples of possible conflict-of-interest situations that could occur in banks!
Granting of loans to investors in order to execute security transactions of which banks can take advantage (f.e. High one-time fees or an increasing share price of the bank)
Advising companies with respect to capital structuring
Foreign currency transactions if they are connected with provisions for a security transaction
22. Briefly explain some of the measures to prevent potential conflicts-of-interest!
Prohibition of accepting gifts from a certain amount to employees
Areas of confidentiality (no access for people outside the compliance & audit department
Independent decisions (no mix-up of deals which are directly or indirectly related to deals with other customers)
23. Which measures shall be taken by bank employees if conflicts-of-interest occur?
· Reporting of actual conflict of interest to Compliance
· Steps to resolve actual conflicts of interest: Decision on further steps by Compliance Officer
–The bank refrains from performing one of several transactions that are in conflict with one another if the conflict was identified before corresponding commitments were made and there are no other obligations.
–Disclosure of conflicts of interest to customer before executing transaction