Diploma in Fintech

Risk & Compliance (DFRC)

EXAMINATIONS

DFRC_01: The Fintech Compliance Framework

DFRC_02: Compliance Risks in a Fintech Environment

Exam Format & Sample Questions

INSTRUCTIONS

Time allowed is TWO hours

Examinations are Open Book

SECTION A = 30 marks

Short form questions2/3 sentence answers

Suggested Solution = 2/3 sentences per question

Answer SIX of EIGHT questions

All questions carry equal 5 marks

SECTION B = 70 marks

Two part (15 or 20 marks each part) discursive questions

Suggested Solution = +/- 1 page per part

Answer TWO of THREE questions (two parts)

All questions carry equal TOTAL 35 marks

SECTION A

All questions equal 5 marks

TOTAL = 30 marks

Sample Questions

• How did FinTech develop and what were some of the important milestones?
• How do FinTech companies differentiate their offerings in terms of customer focus, technological innovation and routes to market?
• What are the constituent parts of the regulatory environment surrounding Fintech?
• Which regulatory bodies and institutions have the most influence on the growth and development, or otherwise of the Fintech sector?
• Industry Bodies involved in standard setting differ from the regulatory bodies in what ways and how important is their input to Fintech?
• Are modern financial institutions and Fintechs paying the price for sins of the past?
• How can the Central Bank of Ireland influence the development of Fintech in Ireland
• Outline the primary responsibilities undertaken by the Central Bank of Ireland for the authorisation of credit institutions, payments institutions and electronic money institutions.
• What are the main regulatory instruments used in both the US and Europe to lead the battle against such illicit transactions and activities?
• How does AML / CFT impact the business of the various forms of Fintech players, or does it?
• Outline the main areas covered and changes which occurred in the latest AML Directive.
• Looking forward, what else do you think may need to be considered for future directive?
• Is the real risk with the institution or Fintech you use or is there a real risk around the device or platform you access your account or details on?
• As data breaches are announced, it is noticeable that banks tend not to be high on the list.
• Is this due to greater security or to less visibility and openness than other sectors?

Can you differentiate between roles that are designated as CF or PCF?

There are a number of approaches to Conduct Risk. One such approach is the 3 Cs Conduct, Culture and the Customer (Client) Can you give an overview of what exactly each of these refers to and why they are important in the approach taken to oversight within Financial Institutions and Fintech?

Briefly assess the critical importance, and challenges, of developing a compliance culture within financial services providers.

In the context of the recent Bank of Ireland fine of Euro 24.5mfor breaching regulations over its IT systems, briefly outline the regulatory focus upon outsourcing risk in technologically enabled operating models.

SECTION B

All equal either 15 or 20 marks

Questions - 2 parts (15 & 20 marks) = 35 marks

TOTAL = 70 marks

Sample Questions

• Examine the evolution and scope of Fintech - the technological enhanced provision of financial services - and differentiate Fintech business and operating models from traditional financial institutions.
• Assess the detailed authorisation process for Fintech credit institutions, payments institutions and electronic money providers in the context of the contemporary Central Bank and European Banking Authority (EBA) regulation and guidance.
• Analyse the Central Banks and the EBAs guidance on the authorisation process for a payment institution, an electronic money institutions, an account information service provider, and the registration of a small electronic money Institution.
• Review the evolution of AML Directives and the subsequence transposition into national (Irish) legislation in the context of compliance and regulatory reporting in an innovative Fintech payments environment.
• Analyse the Central Bank current AML/CFT guidance and the EBAs revised guidance on AML/CFT risk factors from a practitioners operational perspective.
• Evaluate the compliance risks and regulatory focus on the protection, governance, and ethical use of personal and non-personal, data in an increasingly digitised financial services environment.
• Examine the regulation of personal and non-personal data in the context of the opportunities and risks related to Fintech providers of financial products and services.
• Analyse the potential impact of data-driven digital solutions upon financial inclusion and the ethical use of personal data in the development of financial services.
• Detail the Central Bank and EBAs guidelines on the outsourcing, and related mitigation of concentration, operational and systematic risks, of critical financial services by Fintech providers.
• Differentiate between where outsourcing can be used to perform certain activities - for example: client interaction, pricing, credit scoring, insurance claims management and auxiliary services and where outsourcing that can also be used to buy in just the technology and infrastructure for example: the digital solution that enable the provision of financial services.
• Evaluate the extent and structure of outsourcing of critical services by financial institutions and assesses the appropriateness of tools in place to mitigate concentration, operational, and systemic risks.
• Quantify the requirements of the Central Bank of Irelands Fitness and Probity Regime, and the specific Central Bank guidance on the specific requirements related to payment and electronic money institutions.
• Discuss the requirements of the Central Banks Fitness and Probity Regime with respect to the key function holders Controlled Functions (CFs) and Pre-Approved Functions (PCFs) of regulated (Fintech) financial service providers (RFSP).
• Define Insurance Policy or Comparable Guarantee and evaluate the regulatory rationale, controls, and the key risks associated with the Insurance Policy or Comparable Guarantee approach to segregating customer funds.
• In the context of the proposed Markets in Virtual- Assets Regulation (MiCA), evaluate the challenges for Virtual Assert Service Providers (VASPs) in obtaining authorisation from the Central Bank of Ireland, specifically focusing on the areas of consumer protection and anti-money laundering.
• In the context of the Financial Action Task Forces (FATF) four key Customer Due Diligence recommendations, outline the core components of the AML Compliance Framework.
• In the context of the recent Revolut decision to abandon its efforts to obtain a authorisation under the Markets in Financial Instruments (MiFID)Trading from the Central Bank of Ireland (CBI) discuss the challenges in harmonising the regulation of financial services across the Eurozone.
• Evaluate the key regulatory concerns, and potential implications for financial service providers, addressed in EUs proposed Digital Operational Resilience Act (DORA) legislation.