OSCB Banking Assistant flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Nostro account

A bank's account held in its own name at another bank, denominated in that foreign bank's currency, used to settle cross-border payments and hold foreign currency balances.

Real-time gross settlement

A payment system that settles each transfer individually and irrevocably in central bank money, without netting, so a lack of funds stops the payment immediately.

Value dating

Assigning a date on which funds become available or a debit takes effect. Back-value debits the customer later; forward-value credits the customer later, affecting interest.

Exception item

A transaction that fails automated processing or reconciliation, such as a mismatch or unposted entry, which must be researched and resolved manually before the books close.

First-contact resolution

The percentage of customer contacts resolved completely on the first interaction, without escalation, callback, or a repeat contact about the same issue.

Customer lifetime value

The expected net contribution from a customer over the whole relationship, typically estimated from annual contribution multiplied by expected retention years and adjusted for attrition.

Service recovery paradox

The finding that customers who experience a failure resolved well can become more loyal than customers who never had a problem, provided the resolution is fast and genuine.

Vulnerable customer

A customer whose circumstances, such as bereavement, illness, cognitive decline, or coercion, reduce their ability to make informed decisions, requiring adjusted handling and possible escalation.

Available balance

The portion of an account balance a customer can actually withdraw or spend, after subtracting holds and uncleared deposits and adding any available credit line.

Restrictive endorsement

An endorsement such as 'for deposit only' that limits further negotiation of a check, preventing the item from being cashed or transferred to another party.

Stale-dated check

A check presented more than six months after its stated date. A bank may refuse or pay it and should verify the drawer's intent before honoring it.

Provisional credit

Temporary funds credited to a customer's account while a disputed transaction is investigated, subject to reversal if the investigation finds the claim unsupported.

Debt service coverage ratio

Net operating income divided by total debt service. A result below 1.0 indicates operations do not generate enough cash to cover scheduled principal and interest.

Loan-to-value ratio

The loan amount divided by the appraised value of the collateral. Higher ratios mean greater loss given default and usually require mortgage insurance or a lower loan limit.

Five Cs of credit

Character, capacity, capital, collateral, and conditions. Capacity, the borrower's cash flow, is usually the strongest predictor of timely repayment.

Annual percentage rate

The cost of credit expressed as a yearly rate including interest and specified fees, so it equals or exceeds the nominal interest rate whenever fees are charged.

Loan covenant

A contractual promise by the borrower, affirmative (do this) or negative (do not do this), whose breach triggers remedies only as the loan agreement specifies.

Enhanced due diligence

Additional scrutiny applied to higher-risk customers, such as politically exposed persons or those in high-risk jurisdictions, requiring evidence of source of funds and wealth.

Suspicious activity report

A confidential filing to the financial intelligence unit about activity that may indicate money laundering or other crime. Tipping off the subject is prohibited.

Structuring

Deliberately breaking transactions into smaller amounts to avoid a reporting threshold. It is a criminal offense even when the underlying funds come from legitimate sources.

Disparate impact

A neutral policy or practice that produces a disproportionately adverse effect on a protected group and is unlawful unless justified by a legitimate business necessity.

Politically exposed person

An individual entrusted with a prominent public function, plus close associates and family, who presents higher corruption risk and requires enhanced due diligence.

Fraud triangle

The three conditions behind occupational fraud: pressure, opportunity, and rationalization. Controls mainly reduce opportunity through segregation of duties and dual authorization.

Account takeover

Fraud in which a third party gains control of a customer's account, often signaled by a new device, password reset, address change, and a transfer to a new beneficiary.

Phishing

A social engineering attack using fraudulent email or messages to trick a person into revealing credentials or authorizing a payment. Verify through an independent channel.

Card-not-present fraud

Fraud on transactions where the card is not physically presented, such as online or phone orders. It carries higher chargeback risk and relies on verification tools.

Annual percentage yield

The effective annual return on a deposit account, reflecting compounding. It is calculated as (1 + r/n)^n − 1, where r is the nominal rate and n the compounding periods.

Net asset value

The per-share value of a pooled fund, calculated as total assets minus liabilities divided by shares outstanding. Mutual funds price at it once each business day.

Duration

A bond risk measure approximating the percentage change in price for a one percentage point change in yield. Longer duration means greater sensitivity to rate moves.

Fiduciary standard

A duty to act in the client's best interest, placing the client's interest ahead of the firm's. It is stricter than the suitability standard.

Segregation of duties

Splitting authorization, custody, and recordkeeping among different people so no single individual can initiate and conceal a fraudulent transaction.

Tipping off

Disclosing to a suspect that a suspicious activity report has been or will be filed. It is prohibited because it can compromise the investigation and is itself a breach.