A European bank is building a blockchain-based customer identity verification system. The system must comply with GDPR, which requires that personal data be minimized and that individuals have the right to erasure. However, the blockchain is immutable. Which approach best balances GDPR compliance with the use of blockchain?

Store only hashed or pseudonymized identity data on-chain, with the raw data kept off-chain in an encrypted database that supports deletion.

Store full personal data on-chain but allow a trusted administrator to overwrite records when erasure is requested.

Store full personal data on-chain and rely on the immutability to prove compliance.

Avoid using blockchain entirely because GDPR and blockchain are fundamentally incompatible.

A global supply-chain company is planning to move its shipment-tracking records onto a permissioned blockchain shared with logistics partners. The compliance team has identified that a partner in a sanctioned jurisdiction could potentially access the network. According to a structured risk assessment, this scenario would be classified primarily as which type of risk, and what is the most appropriate first mitigation step?

Reputational risk; issue a public statement clarifying the company's compliance commitment.

Legal risk; implement geo-blocking and jurisdiction-based access controls on the permissioned network.

Operational risk; increase the number of validator nodes to improve network resilience.

Financial risk; purchase cyber-insurance to cover potential fines.

A government agency is considering a blockchain for public records, such as property titles. They are concerned about the risk of personal data being exposed to the public. Which risk category does this concern primarily fall under?

Legal and reputational risk from privacy violations

Technical risk from blockchain scalability

Operational risk from system downtime

Financial risk from implementation costs

What is the primary purpose of a compliance mechanism in a blockchain system?

To reduce the cost of mining new blocks

To increase the decentralization of the network

To maximize the speed of transactions

To ensure the blockchain operates in accordance with applicable laws, regulations, and industry standards

Which of the following is an example of a compliance mechanism used in a permissioned blockchain to satisfy anti-money laundering (AML) regulations?

Encrypting all transaction data to protect privacy

Conducting know-your-customer (KYC) verification for all participants before granting access

Using a public blockchain to ensure transparency

Implementing a proof-of-work consensus algorithm

EC-CouncilBlockchain Business Leader Certification

Domain 7Objective 3

Risk Management Strategies and Compliance Mechanisms in Blockchain BBLC Practice Questions (Page 3)

Part of the Governance, Regulation, and Compliance domain, which makes up ~8% of our current practice bank.

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Questions 11–15

11application · medium
A European bank is building a blockchain-based customer identity verification system. The system must comply with GDPR, which requires that personal data be minimized and that individuals have the right to erasure. However, the blockchain is immutable. Which approach best balances GDPR compliance with the use of blockchain?
Select an answer first
12application · medium
A global supply-chain company is planning to move its shipment-tracking records onto a permissioned blockchain shared with logistics partners. The compliance team has identified that a partner in a sanctioned jurisdiction could potentially access the network. According to a structured risk assessment, this scenario would be classified primarily as which type of risk, and what is the most appropriate first mitigation step?
Select an answer first
13application · medium
A government agency is considering a blockchain for public records, such as property titles. They are concerned about the risk of personal data being exposed to the public. Which risk category does this concern primarily fall under?
Select an answer first
14foundation · easy
What is the primary purpose of a compliance mechanism in a blockchain system?
Select an answer first
15foundation · easy
Which of the following is an example of a compliance mechanism used in a permissioned blockchain to satisfy anti-money laundering (AML) regulations?
Select an answer first

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Risk Management Strategies and Compliance Mechanisms in Blockchain BBLC Practice Questions (Page 3)

Questions 11–15

A government agency is considering a blockchain for public records, such as property titles. They are concerned about the risk of personal data being exposed to the public. Which risk category does this concern primarily fall under?

What is the primary purpose of a compliance mechanism in a blockchain system?

Which of the following is an example of a compliance mechanism used in a permissioned blockchain to satisfy anti-money laundering (AML) regulations?

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