Practice Test Questions of Focus

Question 1

1. When an Originator is initiating an MTE, POS or SHR entry where a personal identification number (PIN) is required in connection with the authorization, the Originator MUST comply with

Answer 1

ANSI ASC X9.8 Standards

Question 2

2. Which of the following relates to the EFT Mandate?
   ☐a. The Expedited Funds Availability Act of 1988
   ☐b. Accredited Standards Committee (ASC)
   ☐c. The Debt Collection Improvement Act of 1996
   ☐d. The Office of Foreign Assets Control

Answer 2

C

Question 3

3. When a participant in the ACH network is unable to meet its financial obligation to another financial institution it is an example of what type of ACH risk?

Answer 3

Systemic Risk

Question 4

4. The definition of “Designated Data” in the NACHA Operating Rules includes the following data, processed by an ACH Operator, to the extent such ACH Operator agrees to provide such data to NACHA from time to time:

Answer 4

Data derived from Return Entries or Extended Return Entries

Question 5

5. The ACH Network is governed by all of the following except:
   ☐a. Regulation D
   ☐b. UCC 4A
   ☐c. Electronic Funds Transfer Act
   ☐d. Regulation J

Answer 5

D

Question 6

6. FedWire is subject to:
   ☐a. UCC 3 and UCC 4
   ☐b. Regulation J and Regulation CC
   ☐c. Regulation D and NACHA Operating Rules
   ☐d. UCC4A and Regulation Z

Answer 6

B

Question 7

7. Which ACH Participant provides a warranty that each ACH entry is authorized in accordance with the NACHA Operating Rules?

Answer 7

ODFI

Question 8

8. Providing initial disclosures when a new account is opened and periodic disclosures monthly when there is an electronic funds transfer and at a minimum quarterly when there are no electronic funds transfers to the account is required according to:

Answer 8

Reg E

Question 9

9. File creation time and date are found in the:

Answer 9

File Header Record

Question 10

10. Regulation E defines specific requirements for all of the following except:
    ☐a. Timing requirements for disclosures
    ☐b. Corporate electronic funds transfers
    ☐c. Electronic checks
    ☐d. Dispute resolution

Answer 10

B (Reg E is for consumer transactions ONLY)

Question 11

11. The purpose of the Federal Reserve Bank Operating Circular 4 (OC4) is to:

Answer 11

Govern the clearing and settlement of ACH entries

Question 12

12. Great State Bank (ODFI) receives a notice from NACHA regarding Reporting Requirements for unauthorized returns for one or more Originators or Third-Party
    Senders that NACHA suspects exceeded the threshold of one half of one percent (0.5%). Great State Bank
    must do what (from the choices below)
    ☐a. reduce the rate below 0.5% within 10 banking days and maintain it below that 0.5% for an additional 180 days
    ☐b. respond within 15 banking days via a traceable delivery method asking NACHA for more information as to why the Originator or TPS appears to have exceeded the Unauthorized Entry Return Rate Threshold
    ☐c. respond within 10 banking days via a traceable delivery method providing the Originator’s or TPS’s
    origination volume for the past year
    ☐d. respond within 10 banking days via a traceable delivery method explaining the reason(s) causing the
    Originator or TPS to have exceeded the Unauthorized Entry Return Rate Threshold.

Answer 12

D

Question 13

13. Which of the following specifically addresses national banks and their need to evaluate large dollar payment system network risks and requires reporting this to top management and maintaining agreements with all parties that they do business with?

Answer 13

OCC Banking Circular 235

Question 14

14. ABC Company has 35 employees whom they pay using Direct Deposit via ACH through their ODFI, 1st National Bank. 1st National Bank and ABC Company have an agreement in place (ODFI-Originator Agreement) where ABC Co agrees to be bound by the NACHA
    Operating Rules. According to the NACHA Operating Rules, the employees’ pay, which are consumer credit transactions, can be authorized in all of the following ways EXCEPT:
    ☐a. written and signed or similarly authenticated
    ☐b. either oral or written and signed or similarly authenticated
    ☐c. no authorization required for payroll deposits
    ☐d. orally or by other non-written means

Answer 14

C

Question 15

15. Written and signed or similarly authenticated authorizations are REQUIRED for which of the following debit transactions:
    ☐a.ARC, POP, XCK
    ☐b. XCK, BOC, WEB
    ☐c. WEB, POP, PPD
    ☐d. CCD, RCK, PPD

Answer 15

C

Question 16

16. U.S. Steel Company is stating it has an unauthorized debit Entry posting to its corporate account on Sept 22. On Sept 29, it is requesting the RDFI (Star Bank) to return the Entry as unauthorized. What is the timeframe to return an unauthorized ACH corporate Entry?
    ☐a. Transmit within 2 Banking Days
    ☐b. Available to the ODFI no later than opening of business on the second Banking Day following
    Settlement Date of original Entry
    ☐c. Available to the ODFI by opening of business on the Banking Day following the 60th calendar
    day following Settlement D ate of original Entry
    ☐d. Transmit within 5 Banking Days

Answer 16

B

Question 17

17. Which of the following is NOT a Service Class Code
    ☐a. 200
    ☐b. 220
    ☐c. 225
    ☐d. 230

Answer 17

D

200 - Mixed credits & Debits
220 - Credits Only
225 - Debits Only

Question 18

18. Which of the following fields contains the reason for payment as required by OFAC for IAT Entries?
    ☐a. company entry description field
    ☐b. transaction type code field
    ☐c. secondary SEC Code field
    ☐d. IAT Indicator field

Answer 18

B

Question 19

19. Upon request of a Receiver, an RDFI must provide all payment-related information for CCD, CIE, CTX, and IAT entries to non-consumer accounts by:
    ☐a. The opening of business on the second Banking Day after the request from the Receiver.
    ☐b. The opening of business on the second banking day following the Settlement Date of the Entry.
    ☐c. The second Banking Day following the receipt of the ACH Entry.
    ☐d. The opening of business of the Settlement Date of the Entry that contains payment-related
    information.

Answer 19

B

Question 20

20. All Return Entries must:
    ☐a. contain the exact field data as the original entry.
    ☐b. be made available to the ODFI by opening of business on the 2nd banking day following the settlement date of the original entry.
    ☐c. contain the reason for the return in the addenda information field of the addenda record.
    ☐d. be in the amount of the related original entry.

Answer 20

D

Question 21

21. Which of the following Standard Entry Class codes can be used for both a Zero-Dollar Entry and payment-related information?
    ☐a. CIE and PPD
    ☐b. XCK and RCK
    ☐c. CTX and CCD
    ☐d. TEL and WEB

Answer 21

C

Question 22

The NACHA Operating Rules require that all credit Entries not credited to its Receivers must be returned by the RDFI by:
☐a. Midnight of the Banking Day following the
Settlement Date of the Entry.
☐b. The opening of business on the second Banking Day following the Settlement Date of the Entry.
☐c. Midnight of the Banking Day following the receipt of the Entry by the RDFI.
☐d. The opening of business on the second Banking Day following the Effective Entry Date of the
credit.

Answer 22

B

Question 23

23. If the transaction type code field for an IAT entry contains a secondary SEC Code (ARC, POP, BOC, etc) - in what record will you find the check serial number, terminal city and state, terminal ID?

Answer 23

Remittance Addenda Record

Question 24

24. Anthony opened his checking account with Northern Bank in February. In the initial disclosures provided by Northern Bank upon account opening, the ATM fee was clearly stated as being $3.00 per transaction. Effective October 1, the fee for using an ATM will increase to $3.50. According to Regulation E, how many days prior notice is required when there is a change to the initial disclosures which results in greater consumer liability?
    ☐a. 21 days
    ☐b. 30 days
    ☐c. 15 days
    ☐d. 10 days

Answer 24

A

Question 25

25. Which of the following is not a benefit of Direct Deposit via ACH? ☐a. Increased productivity ☐b. Reduced disbursement float ☐c. Additional employee benefit ☐d. Reduced risk of fraud

Answer 25

B

Question 26

Which of the following specify the requirements for reserves that a depository institution must maintain at a Federal Reserve Bank? ☐ Uniform Commercial Code Article 4A ☐ Federal Reserve Bank Operating Circular 4 ☐ Regulation D ☐ Regulation CC

Answer 26

Reg D

Question 27

The Federal Reserve's Operating Circular No. 4 does all of the following except: ☐ Outlines procedures for processing & delivering items ☐ Establishes a process to monitor ongoing payment system risks ☐ Provides codes for handling disputed returns ☐ Establishes cutoff items, settlement dates and allowances for extensions

Answer 27

Provides codes for handling disputed returns

Question 28

First Bank is returning an IAT entry due to insufficient funds. When doing the Return, which of the following is true relating to IAT Return entries? ☐ only seven mandatory addenda records must be included ☐ seven mandatory plus additional (8th) addenda with return reason code and original entry trace number must be included ☐ only one addenda containing return reason code and original entry trace number must be included ☐ seven mandatory addenda records and two remittance addenda records plus the additional (8th) addenda with return reason code and original entry trace number must be included

Answer 28

seven mandatory addenda records and two remittance addenda records plus the additional (8th) addenda with return reason code and original entry trace number must be included

Question 29

Community Financial Institution made the decision to begin offering ACH Origination as a product to its business customers. The financial institution developed an ACH Origination Agreement for its business customers to sign. The NACHA Operating Rules require which of the following to be included in the agreement: ☐ The financial institution's fees for using its ACH Origination product. ☐ The business customer's user names for the ACH Origination product. ☐ The financial institution's contact information. ☐ The financial institution's restriction on the type of Entries that may be originated.

Answer 29

The financial institution's restriction on the type of Entries that may be originated. (This is based on NACHA OPERATING RULE, not Reg E)

Question 30

What payment system uses gross settlement? ☐ FedWire ☐ Checks ☐ Debit cards ☐ ACH

Answer 30

FedWire

Question 31

A Health Care EFT Transaction must comply with the following format: ☐ CCD with no Addenda Record ☐ CTX with one Addenda Record ☐ CCD with one Addenda Record ☐ CTX with multiple Addenda Records

Answer 31

CCD with one Addenda Record

Question 32

The ACH Network is governed by all of the following except: ☐ Regulation D ☐ UCC 4A ☐ Electronic Funds Transfer Act ☐ Regulation J

Answer 32

Regulation J

Question 33

If the Effective Entry Date of a Batch of Entries is left blank by the ODFI, the ACH Operator will insert the Settlement Date as: ☐ the Banking Day after the processing date as the Settlement Date ☐ the Banking Day of the processing date as the Settlement Date ☐ the Banking Day that is 2 days after the processing date as the Settlement Date ☐ the Banking Day that is 5 days after the processing date as the Settlement Date

Answer 33

the Banking Day after the processing date as the Settlement Date

Question 34

Which of the following is true relating to an IAT (International ACH Transaction) Entry? ☐ 7 mandatory and up to 7 optional (maximum of 14 addenda records) ☐ 7 mandatory, 2 mandatory remittance and 5 optional foreign correspondent (maximum of 14 addenda records) ☐ 7 mandatory, up to 2 optional remittance with or without additional optional foreign correspondent and up to 5 optional foreign correspondent (only a maximum of 12 addenda records) ☐ 7 mandatory, up to 5 optional with 3 allowed for Remittance addenda ( maximum of 12 addenda records)

Answer 34

7 mandatory, up to 2 optional remittance with or without additional optional foreign correspondent and up to 5 optional foreign correspondent (only a maximum of 12 addenda records)

Question 35

Which of the following is a consumer credit application? ☐ Cash concentration ☐ Direct Deposit via ACH ☐ Collection of charitable contributions ☐ Investment contributions

Answer 35

Direct Deposit via ACH

Question 36

This summarizes the control totals from batch controls within the file. It also contains the number of blocks & batches within the file. ☐ File Header Record ☐ Hash totals ☐ Batch totals ☐ File Control Record

Answer 36

File Control Record

Question 37

Sally received a $400 credit entry into her account on Friday. The following Friday, Sally contacted her financial institution to tell them it’s not her transaction. What is the timeframe to return this entry? a. Available to the ODFI no later than opening of business on the second banking day following receipt of notification of refusal from the Receiver b. Transmit by midnight of the banking day following the receipt of notification of refusal from the Receiver c. Available to the ODFI no later than opening of business on the second banking day following the settlement date of the original entry

Answer 37

A

Question 38

Which is a warranty made by the ODFI to the RDFI? a. The Entry has been properly authorized by the ODFI and the RDFI. b. The Originator has no knowledge of the Receiver's revoked authorization. c. The RDFI may rely solely on the Receiver's name for the purpose of posting an Entry to a Receiver's account.

Answer 38

B

Question 39

An ACH Operator receives an ACH Credit item with a stale effective entry date. When will settlement occur? a. The ACH Operator will reject the entry b. Two business days after the processing date c. The next available settlement opportunity

Answer 39

C

Question 40

Individual name field is mandatory for: a. ARC & POP b. TEL & WEB c. PPD & CCD

Answer 40

B

Question 41

When is settlement considered final for ACH credit entries? a. Credit entries are final on the settlement date b. Credit entries are final on the Effective Entry Date c. Credit entries are final the day following the settlement date

Answer 41

A

Question 42

Which entity is required by the Nacha Operating Rules & Guidelines to enter into an agreement with a Sending Point? a. ODFI b. RDFI c. Originator

Answer 42

A

Question 43

Which of the following statements is true regarding Real-Time Payments (RTP)? a. RTP supports credit push and debit pull transactions. b. RTP supports remittance information and other messaging. c. RTP payments have delayed funds availability.

Answer 43

B

Question 44

The Quest Operating Rules® put forth the requirements for the distribution of which types of payments under the Quest service mark? a. Vendor payments b. Federal and state government payments c. Health care payments

Answer 44

B

Question 45

Which of the following statements is true regarding Same Day ACH? a. Both ODFIs and RDFIs are required to participate in Same Day ACH. b. ODFIs can choose to originate Same Day ACH, but RDFIs are required to receive Same Day ACH. c. ODFIs are required to originate Same Day ACH, but RDFIs can choose to receive Same Day ACH

Answer 45

B

Question 46

Per UCC 4A, a contract between a financial institution and a customer may limit liability to the bank unless: a. The customer's liability exceeds $50 b. The financial institution demonstrated "lack of good faith or failure to exercise ordinary care" c. The customer declares bankruptcy

Answer 46

B

Question 47

Your institution originated an erroneous debit. Your operations department realized it quickly and initiated a REVERSAL. Unfortunately, the RDFI returned the erroneous debit prior to receiving the REVERSAL and now has the credit from the REVERSAL. Which risk applies? a. Operational b. Systemic c. Reputational

Answer 47

A

Question 48

Same Day ACH per- transaction dollar limit is: a. $25,000 b. $100,000 c. $1,000,000

Answer 48

C

Question 49

ABC Company initiated a payroll entry for the wrong amount and contacts its ODFI to correct the error. Which participant is required to notify the Receiver of a reversing entry? A. ACH Operator B. RDFI C. ODFI D. Originator

Answer 49

D

Question 50

Which entities facilitate collaboration and communication among various financial institutions, including commercial banks, savings banks, and credit unions, throughout the United States? A. National Pymt Networks B. Regional Pymt Associations C. Federal Reserve System D. Private Clearing Houses

Answer 50

C

Question 51

What is the maximum time frame allowed for a financial institution to contest or correct a dishonored ACH return? A. 1 Banking Day B. 2 Banking Days C. 3 Banking Days D. 5 Banking Days

Answer 51

B