Certified Treasury Professional (CTP)

Correct: Conducting a targeted compliance review is the correct first step because it allows the Compliance Manager to validate the whistleblower’s claims, determine if the issue is systemic or isolated, and assess the actual risk to consumers and the institution. This evidence-based approach is necessary to inform subsequent remediation, such as policy changes or regulatory reporting.

Incorrect: Updating the software to remove override capabilities is a corrective action that should only be taken after the investigation confirms it is the necessary solution; doing so prematurely could disrupt legitimate business operations. Mandating retraining is an important part of remediation but does not address the immediate need to investigate the alleged misconduct or identify existing non-compliant loans. Notifying the regulator is premature before the institution has verified the facts and determined the severity of the issue, as internal investigation should precede formal self-disclosure in most regulatory frameworks.

Takeaway: When responding to whistleblower allegations, a compliance professional must first conduct a targeted investigation to verify the facts and determine the scope of the risk before implementing corrective actions or reporting to regulators.

Correct: To qualify for the administrative exemption under the FLSA, an employee must meet both a salary basis/level test and a specific duties test. The duties test requires that the employee’s primary duty must be the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers, and it must include the exercise of discretion and independent judgment with respect to matters of significance. Routine data entry and filing, even if critical for compliance, generally do not involve the level of independent judgment required for exempt status.

Incorrect: The highly compensated employee threshold is significantly higher than $60,000, and meeting a standard salary threshold alone does not grant exempt status if the duties test is not met. The regulatory importance of a role or its necessity for SEC/FINRA reporting does not dictate FLSA status; the focus remains on the nature of the tasks performed. Finally, FLSA rights are statutory and cannot be waived by a private agreement or contract between an employer and an employee.

Takeaway: FLSA exempt status for administrative roles requires that the employee’s primary duties involve the exercise of discretion and independent judgment on significant business matters, regardless of the job title or salary level.

Correct: Establishing a cross-functional committee with a formal compliance sign-off on the final system configuration ensures that the ‘as-built’ technical environment is verified against the ‘as-designed’ regulatory requirements. This addresses the breakdown in communication between legal, IT, and compliance, ensuring that stakeholders are aligned and that regulatory integrity is confirmed before the product reaches the consumer.

Incorrect: Increasing audit frequency is a detective control that occurs after the fact and does not prevent implementation errors at the source. Having the legal department oversee IT coding is an inefficient use of resources and fails to leverage the technical expertise of IT or the risk-based oversight of compliance. Focusing on disciplinary actions for deadlines addresses speed rather than the quality and accuracy of the regulatory content, which was the primary failure in this scenario.

Takeaway: Successful regulatory implementation requires integrated internal controls where compliance stakeholders validate the final technical output against approved policies before live deployment.

Correct: A root cause analysis is a fundamental component of an effective compliance remediation program. It allows the firm to identify whether the failure was due to lack of training, inadequate staffing, or flawed procedures. Implementing a secondary review process (a ‘four-eyes’ check) provides a critical internal control to ensure that high-risk decisions are vetted and documented properly, directly addressing the failure to meet regulatory reporting deadlines.

Incorrect: Automatically generating SARs without a substantive investigation constitutes ‘defensive filing,’ which is frowned upon by regulators as it degrades the quality of financial intelligence. Moving the investigation process to the legal department for the sake of privilege does not address the operational deficiency in the compliance program. Focusing solely on punitive measures against individuals ignores the systemic nature of the failure and does not provide the necessary controls or training to prevent future occurrences.

Correct: An integrated safety management system is the most effective control because it addresses risk through multiple layers: proactive identification (site-specific assessments), behavioral reinforcement (competency training), and cultural support (non-punitive reporting). By encouraging the reporting of near-misses without fear of retaliation, the organization can identify and mitigate latent risks before they manifest as actual injuries or regulatory violations, which aligns with the foundational principles of a strong compliance culture.

Incorrect: Relying on annual third-party audits is a detective control that only provides a snapshot in time and may miss daily operational hazards. Standardized safety attestations are often viewed as a ‘check-the-box’ exercise that focuses on legal defense rather than active risk reduction. Centralized committees that only review past incidents are reactive and may lack the site-specific granularity needed to manage diverse physical environments effectively across a distributed branch network.

Takeaway: The most effective workplace safety controls are those that integrate proactive hazard identification with a non-punitive culture that encourages continuous reporting and improvement.

Correct: The first and most critical step in an internal investigation is the preservation of evidence. By securing electronic communications, trading logs, and audit trails immediately, the compliance officer prevents the potential deletion or alteration of data (spoliation). This ensures that the investigation is based on a complete and untainted record, which is a fundamental requirement of an effective compliance program and regulatory scrutiny.

Incorrect: Interviewing the subject before securing evidence can lead to the destruction of records or allow the individual to align their story with the available data. Filing a SAR or regulatory report is premature until a preliminary internal review confirms that the activity meets the threshold for suspicious activity. Updating policies is a remedial action that should occur after the investigation is complete and the root cause is identified, rather than as an initial investigative step.

Takeaway: The immediate priority in any internal investigation is the preservation of evidence to ensure a defensible and comprehensive review of the facts.

Correct: In the context of regulatory compliance and corporate governance, the bank is responsible for the actions of its third-party service providers. Performing a comprehensive vendor risk assessment is the correct approach because it addresses both the environmental compliance failure (unauthorized recycling) and the information security risk (missing data destruction logs). This allows the bank to identify the root cause of the vendor’s failure and implement necessary controls, such as requiring environmental permits and certificates of destruction, to ensure ongoing compliance with environmental and data protection laws.

Incorrect: Issuing a statement to deflect responsibility is incorrect because regulatory bodies and the public hold the institution accountable for its supply chain and data security. Reclassifying the task to facilities ignores the significant compliance and security risks inherent in hardware disposal. Suspending activities without investigating the current breach is an overreaction that fails to address the existing non-compliance and does not provide a long-term solution for the bank’s operational needs.

Takeaway: Effective compliance with environmental regulations requires integrating third-party risk management with data security protocols to ensure vendors adhere to both environmental laws and institutional standards.

Correct: An effective compliance program must have a risk-based approach to identifying potential regulatory breaches. By updating the taxonomy and establishing a referral protocol, the firm ensures that complaints—which are a key source of risk intelligence—are properly screened for sanctions and trade compliance issues by subject matter experts before they are closed. This aligns with the principle of integrating internal controls into operational workflows.

Incorrect: Requiring customer service staff to become customs brokers is an inefficient use of resources and does not address the systemic failure of the intake process. Implementing a moratorium on deliveries to high-risk jurisdictions is a business-disrupting measure that fails to fix the underlying procedural gap in how complaints are handled. Relying solely on a monthly retrospective audit is a detective control that occurs too late; regulatory expectations favor preventive controls and real-time escalation protocols for high-risk activities like international trade.

Takeaway: Compliance programs must integrate specific regulatory risk triggers into operational workflows like complaint handling to ensure potential sanctions or trade violations are identified and escalated to specialized oversight functions.

Correct: Under the Sherman Act and related antitrust guidance, the exchange of current or future pricing information, including fee structures and pricing strategies, between competitors is highly sensitive. Even if the intent is benchmarking or resolving complaints, such communication can be interpreted as a per se violation or evidence of a horizontal price-fixing agreement, as it reduces price competition and facilitates collusion.

Incorrect: While privacy and confidentiality are important, the primary risk in a scenario involving competitors discussing fees is antitrust, not Dodd-Frank confidentiality. Tying arrangements involve conditioning the sale of one product on the purchase of another, which is not the issue here. The CFPB does not provide a ‘safe harbor’ for competitors to share sensitive pricing data; rather, antitrust safety zones are typically defined by the Department of Justice (DOJ) and Federal Trade Commission (FTC), and they generally exclude current pricing data.

Takeaway: Directly exchanging current or future pricing information with competitors, even for benchmarking purposes, creates significant legal risk under antitrust laws as it facilitates price coordination.

Correct: Establishing a confidential, independent reporting channel is a hallmark of an effective compliance program. Regulatory bodies, including the SEC and DOJ, emphasize that for a whistleblower mechanism to be effective, employees must feel safe from reprisal. An independent third-party provider helps ensure anonymity, while a zero-tolerance policy for retaliation provides the necessary legal and ethical framework to protect the whistleblower’s career and standing within the firm.

Incorrect: Requiring reports to go through a supervisor is a significant barrier to reporting, as the supervisor may be the subject of the complaint or may attempt to suppress the information. Limiting protections to full-time employees or criminal matters is insufficient, as modern regulations like Sarbanes-Oxley and Dodd-Frank protect a wider range of individuals (including contractors) and types of misconduct (including regulatory and internal policy violations). Sharing the whistleblower’s identity with the subject of the complaint is a direct violation of confidentiality principles and significantly increases the risk of retaliation, which undermines the entire reporting framework.

Takeaway: An effective whistleblower program must prioritize confidentiality and the prevention of retaliation through independent reporting channels and clear organizational policies.