Exam CRCM topic 1 question 59 discussion

The statement describes the Tangible Economic Benefit Rule, which is a provision under 12 CFR 215.3(f). According to this rule, if the proceeds of an extension of credit are transferred to an insider or used for the insider's benefit, it's considered an extension of credit to that insider. However, there are exceptions if the credit is made on substantially the same terms and conditions as those made to a non-insider, and if the proceeds are used in a bona fide transaction involving the acquisition of property, goods, or services from the insider.