PREP Guide - Regulatory Environment - Reg CC: General and Subpart A Flashcards

Question

# Subpart A—General Which authority issues some sections of the EFA Act regulations jointly?

Answer 1

The Board and the Bureau of Consumer Financial Protection. ## Footnote This joint authority ensures consumer protection in the regulations.

Answer 2

* General information * Definitions of terms * Authority for administrative enforcement ## Footnote This subpart lays the groundwork for the understanding of the entire regulation.

Answer 3

Routing number guide for next-day availability checks. ## Footnote This appendix helps identify which routing numbers can be used for quicker check processing.

Answer 4

Model funds-availability and substitute-check disclosure examples. ## Footnote These examples help banks communicate effectively with consumers about their rights and responsibilities.

Answer 5

Official Board commentary with background explanations and practical examples. ## Footnote This appendix provides additional context and clarifications on the regulation.

Answer 6

Currently reserved. ## Footnote This indicates that these appendices may be used for future regulations or guidelines.

Answer 7

Preemption of state laws under the EFA Act and Regulation CC. ## Footnote This appendix clarifies how federal regulations interact with state laws regarding funds availability.

Answer 8

Refers to transaction accounts where account holders can perform transfers or withdrawals via checks, debit cards, or electronic methods. ## Footnote Includes demand deposit accounts, negotiable order withdrawal accounts, and other similar accounts, but excludes certain savings deposits.

Answer 9

* Demand deposit accounts * Negotiable order withdrawal accounts * Other similar accounts ## Footnote Excludes certain savings deposits.

Answer 10

Bank accounts held by financial institutions or the U.S. Treasury. ## Footnote Different definitions of accounts apply in Subpart B.

Answer 11

All deposit types, including savings deposits. ## Footnote This is different from the definitions in Subpart A and Subpart B.

Answer 12

A network for processing debit and credit transfers, regulated under Federal Reserve rules or ACH association rules. ## Footnote ACH is commonly used for direct deposits and bill payments.

Answer 13

An electronic device in the U.S. allowing deposits and other account transactions by natural persons. ## Footnote ATMs provide access to banking services outside of traditional bank hours.

Answer 14

Funds that are finally collected and usable according to the bank’s policies for checks, electronic payments, cash withdrawals, or transfers. ## Footnote This term indicates that the funds are no longer subject to holds or restrictions.

Answer 15

Includes various financial institutions like: * insured banks * mutual savings banks * credit unions * foreign banks operating in the U.S. ## Footnote In certain contexts, it also includes entities like the Federal Reserve Banks and state governments.

Answer 16

The portion of a business day when a bank office is open to the public for most banking functions. ## Footnote Banking days may vary based on the institution's hours of operation.

Answer 17

A calendar day excluding weekends and holidays like New Year’s Day, Independence Day, and others. ## Footnote If these holidays fall on a Sunday, the following Monday is also excluded.

Answer 18

Refers to United States coins and currency. ## Footnote Cash is a fundamental form of payment in transactions.

Answer 19

A check that: * Is drawn on a bank. * Is signed by an officer or employee of the bank as the drawer. * Represents a direct obligation of the bank. * Is provided to a customer or acquired for remittance purposes. ## Footnote Cashier's checks are often used for large transactions due to their guaranteed nature.

Answer 20

A check where the drawee bank certifies that: * The drawer’s signature is genuine. * Funds equal to the check amount are set aside to pay it or the bank agrees to pay it upon presentment. ## Footnote Certified checks provide assurance to the payee that the funds are available.

Answer 21

False ## Footnote A Cashier’s Check is drawn on the bank's account, not an individual's.

Answer 22

Certified ## Footnote Certified checks are typically used for secure transactions.

Answer 23

The geographical area served by a Federal Reserve Bank for check processing activities ## Footnote This region defines where checks are processed and settled.

Answer 24

An account primarily used for personal, family, or household purposes ## Footnote This type of account is distinct from business or commercial accounts.

Answer 25

The first bank to which a check is transferred, even if it also serves as the paying bank or payee ## Footnote It is the initial point of deposit for a check.

Answer 26

Payments made via wire transfer or ACH credit transfer ## Footnote This form of payment is increasingly used for transactions.

Answer 27

The process of sending a check to a collecting or paying bank for settlement or payment ## Footnote This is a key step in the check clearing process.

Answer 28

A check drawn on a local paying bank, meaning one in the same check-processing region as the depositary bank ## Footnote Local checks generally clear faster due to proximity.

Answer 29

A bank located in the same processing region as the depositary bank or its ATM/branch where the check was deposited ## Footnote This location is crucial for check processing efficiency.

Answer 30

Mergers or consolidations between two or more banks and transfer of substantial assets and liabilities from one bank to another ## Footnote This can significantly impact the banking landscape.

Answer 31

A negotiable demand draft drawn on or payable through or at an office of a bank ## Footnote A check can be different forms as described in the definitions.

Answer 32

A check ## Footnote This is one of the forms that qualifies as a check.

Answer 33

A negotiable demand draft ## Footnote This type of draft is included in the definition of a check.

Answer 34

A demand draft that is not payable through or at a bank ## Footnote This is included in the definition of a check.

Answer 35

A check ## Footnote This form of payment qualifies under the check definition.

Answer 36

A check ## Footnote This is included in the definitions of checks.

Answer 37

An original check and a substitute check ## Footnote This reflects the broader definition of what constitutes a check.

Answer 38

No ## Footnote A check must be a negotiable instrument and not a noncash item.

Answer 39

Yes ## Footnote The nature of the instrument defines it, not the terminology used.

Answer 40

A nonnegotiable demand draft of the type described above ## Footnote This extends the definition of check in specific contexts.

Answer 41

An item that would be considered a check except for specific reasons such as: * A passbook, certificate, or other document is attached * It includes special instructions (e.g., requesting payment confirmation or dishonor notice) * It consists of more than a single thickness of paper (unless compatible with automated check processing equipment) * It has not been preprinted or encoded in magnetic ink with the paying bank's routing number ## Footnote Noncash items do not follow the standard check format due to these exceptions.

Answer 42

A check that is payable by, through, or at a nonlocal paying bank. ## Footnote Nonlocal checks are typically processed differently than local checks.

Answer 43

A bank that is not a local paying bank in relation to the depositary bank. ## Footnote This distinction affects how checks are processed and cleared.

Answer 44

An ATM that is not owned or exclusively operated by the depositary bank. ## Footnote Nonproprietary ATMs can be accessed by customers of different banks.

Answer 45

The bank responsible for paying a check, which includes: * The bank where the check is payable, unless sent elsewhere for payment * Federal Reserve Banks or Federal Home Loan Banks paying checks * A government entity (state or local) on which a check is drawn ## Footnote The paying bank can vary based on how the check is processed.

Answer 46

For certain subparts (C and D), it includes: * Banks through which checks are payable * Banks identified by routing numbers where checks are sent for collection/payment ## Footnote This expands the definition to include banks directly involved in processing checks.

Answer 47

[processing]

Answer 48

False ## Footnote The definition includes any bank involved in the processing or payment of a check.

Answer 49

It indicates that any bank whose routing number appears on a check is considered a paying bank if the check is sent for payment or collection through that bank. ## Footnote This ensures comprehensive coverage of all banks involved in check processing.

Answer 50

An ATM owned or operated by the depositary bank or located on its premises or within 50 feet of it and not identified as operated by another entity. ## Footnote If multiple banks qualify under ownership criteria, the ATM is proprietary to the bank that operates it.

Answer 51

A returned check prepared for automated return to the depositary bank, typically placed in a carrier envelope or attached with a strip and encoded in magnetic ink. ## Footnote It does not require additional check elements, such as the depositary bank's name.

Answer 52

A bank, other than the paying or depositary bank, that handles a returned check or a notice in lieu of return. ## Footnote It is also considered a collecting bank under UCC 4-202(b).

Answer 53

The number printed on a check in fractional or nine-digit form, appearing in a bank's indorsement or as part of an electronic check's bank-identification number. ## Footnote Examples include routing numbers under subparts C and D.

Answer 54

A bank of comparable size, located in the same community, with similar check-handling activities as the paying or returning bank.

Answer 55

U.S. states, District of Columbia, Puerto Rico, American territories, and additional U.S. territories for certain subparts.

Answer 56

A check drawn by a bank, provided to a customer, and drawn on or payable through another bank, typically used for remittance purposes.

Answer 57

* Drawn on or payable through or at a bank * Designated on its face by the term traveler's check or similar * Provides for a specimen signature of the purchaser at purchase * Provides for a countersignature of the purchaser at negotiation.

Answer 58

Refers to general-purpose political subdivisions such as cities, towns, or counties, but excludes special-purpose entities like school or water districts.

Answer 59

An electronic order to pay a fixed amount, processed through networks like Fedwire or CHIPS. It excludes electronic fund transfers defined under the Electronic Fund Transfer Act.

Answer 60

Defined as per § 210.26(e), referring to the Federal Reserve Bank's funds transfer system.

Answer 61

Means honesty and adherence to reasonable commercial standards of fair dealing.

Answer 62

Calculated using the Federal Funds rate averaged over applicable days and divided by 360.

Answer 63

A branch of one bank that accepts deposits on behalf of another bank.

Answer 64

A bank claiming recredit from an indemnifying bank for substitute check-related issues.

Answer 65

A bank involved in forwarding a check for collection, excluding the paying bank.

Answer 66

A natural person dealing with checks from or for a consumer account.

Answer 67

A person holding an account with a bank.

Answer 68

A bank providing indemnity for remote deposit capture or electronically-created items and substitute checks.

Answer 69

Key information printed near the bottom of a check in magnetic ink, including: * Routing number * Account number * Check number * Check amount (in some cases) * Other relevant data ## Footnote The MICR line is designed to enable automated processing of checks.

Answer 70

ANS X9.13 ## Footnote This standard specifies the proper placement and location of MICR printing on original checks.

Answer 71

ANS X9.100-140 ## Footnote This standard governs the requirements for an Image Replacement Document (IRD).

Answer 72

ANS X9.100-187 ## Footnote This standard applies to the use of MICR data in electronic image exchanges.

Answer 73

False ## Footnote The MICR line is specifically designed for automated processing.

Answer 74

[key learning term] ## Footnote Possible answers include routing number, account number, check number, check amount, or other relevant data.

Answer 75

To enable automated processing of checks and ensure compatibility with automated check processing systems. ## Footnote This facilitates seamless forward collection, clearing, and return processes.

Answer 76

A paper reproduction (e.g., a printout, photocopy, or substitute check) or an electronic reproduction agreed upon by the recipient instead of a paper copy. ## Footnote This includes any format that accurately represents the original check.

Answer 77

A copy that accurately represents all information on the original check's front and back at the time of truncation or is adequate to verify a claim's validity. ## Footnote This ensures that the copy can be used to validate the original transaction.

Answer 78

Delivery of a substitute check or its representation from a bank to a person (not another bank). ## Footnote This process involves the physical or electronic movement of check information.

Answer 79

The bank is compensated if it charges the recipient’s account or receives value for the substitute check, original check, or representation. ## Footnote This is a key element in the exchange of checks, ensuring that banks receive value for their services.

Answer 80

Removing the original check from the process and sending either a substitute check or agreed information (e.g., MICR data or an electronic image) in place of the original check. ## Footnote Truncation streamlines the check processing system.

Answer 81

The bank that truncates the original check. If the check is truncated by a person (not a bank), the first bank to transfer, present, or return the substitute check or related information becomes the truncating bank. ## Footnote This definition is important for identifying the responsible party in check processing.

Answer 82

A check that is not created by the paying bank and does not bear a signature physically or electronically applied by the account holder.

Answer 83

Any account, including credit arrangements, that allows checks payable by, through, or at a bank.

Answer 84

An electronic image and related information derived from a paper check.

Answer 85

Must be sent to a receiving bank under an agreement and comply with ANS X9.100-187 standards unless otherwise specified.

Answer 86

An electronic image with all the attributes of an electronic check but created digitally rather than derived from a paper check.

Answer 87

ANS X9.100-187

Answer 88

A bank that provides an indemnity with respect to: * Remote deposit capture * An electronically-created item * A substitute check ## Footnote Indemnity refers to a security or protection against loss or damage.

Answer 89

An item that would otherwise be a check, except for certain conditions such as being accompanied by special instructions, consisting of more than a single thickness of paper, or not containing a routing number in magnetic ink. ## Footnote Conditions include: passbook or certificate attached, special advice requests, and checks not preprinted in magnetic ink.

Answer 90

A bank by which a check is payable and to which it is sent for payment or collection. ## Footnote This may include Federal Reserve banks, Federal Home Loan Banks, and state or local governments on which the check is drawn.

Answer 91

A bank that creates a substitute check or handles a substitute check created by a non-bank. ## Footnote It is the first bank that transfers, presents, or returns that substitute check.

Answer 92

A check not created by the paying bank that does not bear a signature applied by the person on whose account the check is drawn.

Answer 93

A bank (other than paying or depositary bank) that handles a returned check or notice in lieu of return. ## Footnote It may also act as a collecting bank for purposes of UCC §4–202(b).

Answer 94

A number printed on the face of a check in fractional form or nine-digit form, used to identify the paying bank. ## Footnote This may also include the bank-identification number in electronic checks.

Answer 95

✓ Accurately represents all information on original check; and ✓ Contains the legal legend that reads, "This is a legal copy of your check." ## Footnote You can use it the same way you would use the original check