Chapter 4 Reconciliations and investigations

Question 1

Cash management

Answer 1

The daily management of an organization’s current account balances

Question 2

Home currency

Answer 2

Mandatory cash reserve at central bank account

Question 3

Foreign currency

Answer 3

Zero end-of-day balance

Question 4

Sweeping

Answer 4

Transferring from subaccounts to main account

Question 5

Nostro balance report

Answer 5

1. Daily forecast of the final balance of each nostro account
2. Time horizon of 5-6 business days
3. Used for cash control, cash forecasting and cash collateral control

Question 6

Nostro reconciliation

Answer 6

• Checking data for accuracy and completeness by comparing 2 different sources
• For every external payment instruction a duplicate payment instruction is sent to the ledger

Question 7

Custodian reconciliation

Answer 7

• Reconciliation of securities by comparing SWIFT messages to BO-system

Question 8

MT 535

Answer 8

Statement of holding

Question 9

MT 536

Answer 9

Statement of transactions

Question 10

MT 537

Answer 10

Statement of pending transactions

Question 11

Payment discrepancy 1 Ledger debit

Answer 11

No nostro credit: they forgot to pay us

Question 12

Payment discrepancy 2 Ledger credit

Answer 12

No nostro debit: we forgot to pay

Question 13

Payment discrepancy 3: nostro credit

Answer 13

No ledger debit: we got paid without expecting it

Question 14

Payment discrepancy 4: nostro debit

Answer 14

No ledger credit: fraud

Question 15

Back valuation claim

Answer 15

Claim for the interest expenses that a bank has to pay as a result of another bank failing to make the correct payment