Free CISI Global Financial Compliance practice questions

Not quite. The answer is A.

Regulation aims to increase confidence and trust in markets, protect consumers, reduce financial crime and encourage economic development. It cannot guarantee returns, because managing risk is not the same as removing it. Reducing financial crime is an express objective, and greater market confidence is the benefit the whole regime exists to deliver, so neither of those is the exception.

Not quite. The answer is A.

Assessing measures' adequacy and advising staff on obligations are the compliance function's own duties; human resources, product approval and financial reporting each carry separate responsibilities.

Not quite. The answer is C.

Terrorist financing usually moves modest amounts, which makes individual transactions harder to distinguish from ordinary activity even though the total funding a group needs may be substantial. Suggesting that larger sums are involved reverses the position. Funds move by electronic transfer, informal value transfer and trade as readily as by cash, and no offshore centre need be involved at all.

Not quite. The answer is A.

Client Focus requires members to treat clients fairly, act as a good steward of their interests, and never exploit confidential information for personal gain. Personal Accountability concerns broader professional standards, Professional Development concerns CPD, and Aware of Capabilities concerns declining unqualified work.

Not quite. The answer is B.

The OECD definition covers the relationships between a company's management, its board, its shareholders and other stakeholders, and it provides the structure through which objectives are set and performance is monitored. Regulators and auditors act on that structure from outside it rather than forming part of the relationship being defined. Creditors and tax authorities are claimants on the company, and customers and their advisers are counterparties; putting either pair in place of shareholders would leave the owners of the company out of the definition altogether.

Not quite. The answer is B.

Law supplies the structural framework, such as FSMA 2000, while regulation supplies the rules and standards governing market conduct, conflicts of interest and treating customers fairly. Primary legislation is enacted by Parliament rather than written by a supervisor. Case law is judicial decision on disputes already litigated, and a market convention is voluntary practice rather than an enforceable standard.

Not quite. The answer is A.

Compliance risk is the risk of legal or regulatory sanctions, material financial loss or reputational damage arising from a failure to comply with laws, regulations, rules, standards and codes of conduct. Proprietary trading losses arise from positions the firm has deliberately taken, adverse market sentiment moves prices for reasons unconnected with the firm's conduct, and unplanned IT outages are an operational risk, so none of the three is compliance risk.

Not quite. The answer is B.

The Wolfsberg Group is a private-sector body of banks that issues guidance on private banking, correspondent banking and related activities to help firms manage financial crime risk. The World Bank, IMF and UN Security Council each play different international roles but do not issue this specific industry guidance.

Not quite. The answer is C.

Fair and orderly markets give businesses easier access to capital, give investors confidence in the prices they see published, and protect investors from market abuse. What they never do is guarantee any firm a minimum profit, because regulation aims to make markets function well rather than to protect an individual firm's profitability.

Not quite. The answer is D.

Poor governance can lead the market to doubt a bank's ability to manage its assets and liabilities, including deposits, and that loss of confidence can produce a run or a liquidity crisis whose cost falls on the public. A capital add-on can follow weak governance, but only after a supervisory assessment, so it is never automatic. Withdrawing authorisation is a supervisory decision reached through a formal process rather than an immediate consequence, and replacing the external auditor is not a governance sanction at all.