What is the primary objective of banking compliance?
Banking compliance ensures that banks operate within legal and regulatory frameworks to prevent misconduct and protect clients.
Which regulation is designed to combat money laundering activities?
The Anti-Money Laundering (AML) regulation is aimed at detecting and preventing illegal financial activities through customer verification and reporting.
What type of risk arises from failures in internal processes or systems?
Operational risk is associated with internal process failures, human errors, or system breakdowns within a financial institution.
What does the Basel III framework primarily aim to strengthen?
Basel III enhances regulation, supervision, and risk management within the banking sector by increasing capital requirements and liquidity standards.
Why is risk assessment important in banking operations?
Risk assessment helps banks identify, measure, and mitigate risks, ensuring financial stability and regulatory compliance.
Which risk relates to a borrower's failure to meet debt obligations?
Credit risk refers to the possibility that a borrower will not repay a loan or meet contractual obligations, affecting the bank’s financial health.