PREP Guide - Standards Flashcards
(111 cards)
1
Q
A
2
Q
What is the accredited standards body for financial services?
A
Accredited Standards Committee (ASC) X9, Inc.
Commonly referred to as X9
3
Q
What does X9 create?
A
American National Standards Institute (ANSI) standards
Standards accredited by ANSI can be obtained from www.ansi.org
4
Q
Which standards are commonly used in the check payments system?
A
Standards referenced in Regulation CC for:
* Substitute check
* Paper check
* Electronic check
* Electronic returned check
5
Q
What does ANSI X9.100-140 specify?
A
Image Replacement Document (IRD)
Provides a specification for an IRD in the financial industry
6
Q
What is a machine-readable substitute document created from?
A
The image derived from the front and back of the original check
7
Q
Is the use of magnetic ink required for IRD?
A
No, if the IRD is created for a paid item returned to the issuing institution’s customer as a properly paid item
E-13B MICR font characters may be printed in non-magnetic ink for this use
8
Q
What must an IRD conform to?
A
All other requirements of the standard
9
Q
How is a substitute check defined in Reg CC §229.2 (aaa)?
A
Must conform in paper stock, dimension, and generally applicable industry standards
10
Q
What does Regulation CC state about check images?
A
The check image may be reconverted to create a substitute check (aka IRD) at any point
11
Q
What does the ANSI X9.100-140 standard define?
A
An IRD which can be used as a substitute check as defined in Regulation CC
12
Q
What are some uses of an IRD?
A
- Returns
- Re-presentment
- Inclusion in customer statements
13
Q
What were defined in Annex A of the standard?
A
Return reason codes
Code Description Region 7F Text and Overlay Abbreviations
14
Q
Where are return reason codes contained?
A
ANSI X9.100-188 standard
15
Q
What does the Forward Subsequent IRD Front View display?
A
Displays the following notations:
* Legal Legend
* Reconverting Bank information
* Truncating Bank information
* MICR line
* Original scanned front
* Substitute check identified
16
Q
What information is found in the Forward Subsequent IRD Back View?
A
Includes:
* BOFD Endorsement Area
* BOFD Endorsement for Original IRD
* Subsequent Endorsements
17
Q
How are the endorsements printed in the Forward Subsequent IRD Back View?
A
Last four endorsements printed in oldest to newest sequence
18
Q
What does ANSI X9.100-160-1 standard establish?
A
Establishes the placement and location for printing MICR ink on checks, drafts, and other documents
19
Q
What is the purpose of the MICR band on documents?
A
Reserved for magnetic encoding and divided into character spaces
20
Q
List the common fields with fixed format for MICR.
A
- Amount Field
- Routing Field
- Optional EPC field
21
Q
What does the On-Us Field format depend on?
A
Determined by the needs of the issuing financial institution
22
Q
What is the purpose of the Auxiliary On-Us Field?
A
May appear at the extreme left side on larger checks
23
Q
What does ANSI X9.100-160-2 standard focus on?
A
Establishes assignment and management of External Processing Code field or EPC
24
Q
What is the significance of the EPC digit?
A
Conveys special information for the correct handling or routing of checks
25
What does EPC ‘2’ identify?
Return items that can be processed within the forward presentment system
26
What is the use of EPC ‘4’?
Assigned for usage in creation of a forward or return IRD conforming to the ANSI X9.100-140 standard
27
What does EPC ‘5’ signify?
Assigned for usage in the creation of a return IRD conforming to the ANSI X9.100-140 standard
28
What does EPC ‘6’ identify?
Identifier of Remotely Created Checks (RCCs)
29
Fill in the blank: The magnetically encoded band on checks is reserved for _______.
magnetic encoding
30
True or False: The BOFD Endorsement Area appears on the front view of the Forward Subsequent IRD.
False
31
What is a cash letter?
Group of negotiable instruments, usually checks
## Footnote
Includes instructions for handling
32
What information does a cash letter include?
Instructions for handling, from whom it is, where it is going, and what kind of items are included
## Footnote
Includes forward collection items and return checks
33
Who is the presenting bank in a cash letter?
From whom it is
34
Who is the receiving bank in a cash letter?
Where it is going
35
What types of items are included in a cash letter?
* Forward collection items
* Return checks
36
What control totals does a cash letter include?
Total number of items and total dollar value
37
What does the ANSI X9.100-187 standard provide for the financial industry?
Format necessary to perform electronic check exchange
38
What does the ANSI X9.100-187 standard facilitate?
Electronic movement or exchange of check-related data and images
## Footnote
For purposes of forward check presentment, IRD creation, customer deposits, and returns processing
39
What does the ANSI X9.100-187 standard establish?
File sequences, record types, and field formats for electronic exchange of check MICR line data and check images
40
What structure does the ANSI X9.100-187 standard utilize?
Cash letter structure
41
What types of data can the cash letter structure support?
* Posting data only
* Posting data and check images
* Posting data followed by an additional data and image file
42
What defines records for both forward and return image exchange?
ANSI X9.100-187
## Footnote
It includes 20-series records for forward image exchange and 30-series records for return image exchange.
43
What is the first record of a file in ANSI X9.100-187?
File Header Record (Type 01)
## Footnote
It contains Origin/Destination Routing Numbers and Names, and Creation Date and Time.
44
What does the File Control Record (Type 99) contain?
* Cash Letter count
* Item count
* Total amount
## Footnote
It is the last record of the file and provides control information.
45
What is the purpose of the Cash Letter Header Record (Type 10)?
It is the first record of cash letter containing routing numbers and various dates and codes
## Footnote
It indicates whether the cash letter is forward (01) or return (03).
46
What information does the Cash Letter Control Record (Type 90) provide?
* Bundle Count
* Item Count
* Total Amount
## Footnote
It provides control totals for the cash letter.
47
What is included in the Bundle Header Record (Type 20)?
* Destination and ECE Institution Routing Numbers
* Various dates
* Bundle ID and Sequence Number
* Cycle Number
* Code indicates forward or return bundle
## Footnote
The bundle cannot be mixed in the same cash letter.
48
What does the Bundle Control Record (Type 70) provide?
* Item count
* Total amount
* Images within Bundle count
## Footnote
Typically contains approximately 300 items in each bundle.
49
What information is contained in the Check Detail Record (Type 25)?
* Information from MICR line of check
* ECE Institution Item Sequence Number
* Codes indicating documentation type, returns accepted, archive availability, MICR line repair
## Footnote
For business-sized checks, it carries the aux-on us field.
50
What does the Check Detail Addendum A Record (Type 26) indicate?
* Information on return location for customer returns
* Conforms to Reg CC requirements
## Footnote
It may have multiple records if the check is re-presented.
51
What is the purpose of the Check Detail Addendum C Record (Type 28)?
* Contains Return Reason from prior Type 35 record
* Identifies subsequent endorsers
## Footnote
It conforms to Reg CC and other endorsement requirements.
52
Fill in the blank: The Bundle Control Record (Type 70) provides control totals in a bundle for _______.
Item count, Total amount, Images within Bundle count
53
True or False: The Cash Letter Header Record (Type 10) includes the ECE Institution Routing Numbers.
True
54
Fill in the blank: The File Header Record (Type 01) contains the _______ and Destination Routing Numbers.
Origin
55
What is a Return Record (Type 31)?
One record for each return item created by paying bank or returning institution containing:
* Information from Check Detail Record or original check
* Forward Bundle Date
* Codes to indicate:
* Return Reason
* Number of Times Returned
## Footnote
The Return Record is essential for tracking returned checks and their details.
56
What does a Return Addendum B Record (Type 33) contain?
Used in conjunction with Return Record (Type 31) and may contain:
* Auxiliary On-Us field
* Information for business-sized checks such as:
* Consecutive serial numbers
* Account control information
* Product codes/other information
## Footnote
The Auxiliary On-Us field is optional and is positioned left of the routing number field on the MICR line.
57
What is the purpose of the Return Addendum A Record (Type 32)?
Mirrors Check Detail Addendum A Record (Type 26) and identifies return location/BOFD.
## Footnote
BOFD stands for Bank of First Deposit.
58
What information does the Return Addendum D Record (Type 35) contain?
Contains:
* Paying bank identification
* Return reason code (same as Return Record Type 31)
* For re-presented items, mirrors Check Detail Addendum C Record (Type 28)
## Footnote
This record helps track subsequent endorsing institutions during the forward collection process.
59
What do Image View Detail (Type 50) and Image View Data (Type 52) Records convey?
Convey image data and image of the check:
* On forward collection for Check Detail Record (Type 25)
* On return for Return Record (Type 31)
## Footnote
These records are essential for visual verification of checks.
60
What is required for each check imaged regarding Image View Records?
Must have:
* Pair of 50/52 records for front view
* Pair of 50/52 records for back view
* Partial views may be permitted by agreement
## Footnote
This ensures comprehensive visual documentation of each check.
61
Fill in the blank: The Return Record (Type 31) contains codes to indicate the _______.
[Return Reason]
## Footnote
This is crucial for understanding why a check was returned.
62
True or False: The Auxiliary On-Us field is mandatory in the Return Addendum B Record (Type 33).
False
## Footnote
The Auxiliary On-Us field is optional.
63
What does the Type 50 Record contain?
Codes that describe the image including:
* Format and Compression
* View side (front or rear)
* View descriptor (full or partial view)
* Digital signature and security information, if included
## Footnote
This record is used for image representation in check processing.
64
What information is included in the Type 52 Record?
The image of the check and:
* Security information
* Digital signature, if included
## Footnote
This record is essential for the storage and verification of check images.
65
True or False: The Type 50 Record includes the actual image of the check.
False
## Footnote
The Type 50 Record describes the image but does not contain the image itself.
66
Fill in the blank: The Type 50 Record includes codes for format and _______.
[Compression]
67
What does the term 'View descriptor' refer to in the Type 50 Record?
It refers to whether the view is full or partial
## Footnote
This descriptor helps in understanding the completeness of the image representation.
68
What does ANSI X9.100-188 provide?
List of Return Reason codes used for image exchange and the creation of IRDs
## Footnote
IRDs refer to Image Replacement Documents.
69
What type of content does the Annex of ANSI X9.100-188 include?
Informational appendix discussing proper use of return codes
70
Does the ANSI X9.100-188 standard address implementation considerations?
No
71
Is the X9.100-188 Return Reasons Standard free?
Yes
72
What considerations does the ANSI X9.100-188 standard not address?
* Operational considerations
* Implementation considerations
* Settlement considerations
## Footnote
For additional information, see NCP Study Center references section.
73
What is the purpose of UCD TR 47?
To clarify how institutions should apply the standard for populating data files with check information to be exchanged
## Footnote
UCD TR 47 is a free document from the NCP study center.
74
What type of images are permissible for exchange according to UCD TR 47?
Only bi-tonal images (black/white images)
## Footnote
This refers to the format of check images for exchange.
75
What does UCD TR 47 formalize?
Industry standard for check image exchange using the X9.100-187 standard format
## Footnote
It does not replace the ANSI X9.100-187 standard.
76
Who is UCD TR 47 designed to clarify standards for?
Financial institutions
## Footnote
It addresses necessary payment data exchanged between collecting and paying institutions.
77
What records does the standard define for check image exchange?
Records for forward and return exchanges
## Footnote
UCD explains how to populate the fields in those records.
78
What does UCD TR 47 outline regarding records?
Each record deemed to have critical payment data and lists all associated fields contained in the standard
## Footnote
It also describes unique field validations for various exchanges.
79
What types of exchanges are mentioned for unique field validations?
* Endpoint Exchange
* Federal Reserve
* SVPCO
* Viewpointe
## Footnote
These exchanges have specific field validation requirements.
80
What is required of all image exchange participants according to UCD TR 47?
Obtain, use, and adhere to the record and field usage definitions detailed in the ANSI X9.100-187
## Footnote
Compliance with these definitions is necessary for proper image exchange.
81
What do the Uniform Commercial Code (UCC) and Regulation CC (Reg CC) place on parties handling a check?
Certain responsibilities regarding indorsements
## Footnote
These responsibilities include how indorsements are managed and recorded.
82
What types of indorsements are recognized for checks?
* Physical: Sprayed, printed or overlaid on the check
* Electronic: Carried in the ANSI X9.100-187 file format
* Both
## Footnote
Indorsements can be physical or electronic, or a combination of both.
83
What happens to physical indorsements when a check is converted to an image?
The image retains any physical indorsements present at the time of capture
## Footnote
However, if the image is captured before physical indorsements are applied, those will not appear.
84
How can a complete indorsement history be maintained for a check?
By including additional electronic indorsements in an ANSI X9.100-187 file
## Footnote
This allows for a comprehensive record of all indorsements.
85
Are electronic indorsements acceptable in lieu of physical indorsements on a check?
Yes
## Footnote
Electronic indorsements can replace physical ones on the back of the check.
86
What does Check 21 (Reg CC Subpart D) require for electronic items converted back to paper form?
Previous indorsements must be carried on the substitute check regardless of their original form
## Footnote
This ensures continuity in indorsement information.
87
What does the ANSI X9.100-187 file format support?
* Image cash letter structure for:
* Posting data only
* Posting data & check images
## Footnote
This format is essential for electronic check processing.
88
What are the requirements of the IRD specifications in the ANSI X9.100-187 file format?
* Properly identify the purpose of electronic indorsements
* Provide an indorsement audit trail
## Footnote
This ensures traceability and accountability in the indorsement process.
89
How can indorsements be carried in electronic records according to ANSI X9.100-187?
* Physical indorsements on the check image (Type 52)
* Electronic information in related X9 detail and addendum records
## Footnote
These methods ensure that indorsement data is accurately recorded.
90
What do various record types in ANSI X9.100-187 contain?
Fields required for maintaining indorsement information
## Footnote
This includes data necessary for tracking and verifying indorsements.
91
What is a Check Detail Record (Type 25)?
One record for each check containing 15 fields with information from check’s MICR line, item sequence number, and other codes.
## Footnote
It includes specific information for business-sized checks, such as the aux-on us field.
92
What information does the Check Detail Addendum A Record (Type 26) provide?
Identifies/provides information on return location for customer returns, typically BOFD, and conforms to Reg CC requirements.
## Footnote
This is the first of three addendum records associated with the Check Detail Record (Type 25) and may have multiple records when a check is re-presented.
93
What is the purpose of the Check Detail Addendum B Record (Type 27)?
Used only under clearing agreements, identifies a defined value for the length of the image reference key, which is normally a variable value.
## Footnote
This is the second addendum record associated with the previous Check Detail Record (Type 25).
94
What are the two key purposes of the Check Detail Addendum C Record (Type 28)?
1. Return Reason when flipped from a prior 35 record on a re-presented item. 2. Shows bank’s role in collection process if additional financial institution(s) handled the item and provided indorsement(s).
## Footnote
This is the third of three addendum records associated with the previous Check Detail Record (Type 25).
95
True or False: The Check Detail Addendum C Record (Type 28) shows indorsement information of a subsequent bank in the collection process.
True
## Footnote
It also includes the depositary bank’s indorsement with an indicator if a returns consolidator agreement is in place.
96
Fill in the blank: The Check Detail Addendum A Record (Type 26) conforms to _______.
Reg CC requirements
## Footnote
This ensures that the information provided meets regulatory standards.
97
What is a Return Record (Type 31)?
One record for each return created by paying bank or returning institution containing information from Check Detail Record or original check
## Footnote
Includes codes to indicate return reason and number of times returned.
98
What is the purpose of the Return Addendum A Record (Type 32)?
First of four addendum records associated with Return Record (Type 31) that mirrors Check Detail Addendum A Record (Type 26) which identifies return location for customer returns
## Footnote
This addendum is crucial for tracking where returns originate.
99
What does the Return Addendum B Record (Type 33) contain?
Second of four addendum records associated with Return Record (Type 31) containing 6 fields, carries the Auxiliary On-Us field for business-sized checks
## Footnote
This field is found in Check Detail Record (Type 25) on Forward presentment file.
100
What is the function of the Return Addendum C Record (Type 34)?
Third of four addendum records associated with Return Record (Type 31) that mirrors the Type 27 record, used only under clearing agreements
## Footnote
Identifies a defined value for the length of the image reference key, which is normally a variable value.
101
What information does the Return Addendum D Record (Type 35) provide?
Fourth of four addendum records associated with Return Record (Type 31) that mirrors Check Detail Addendum C Record (Type 28), identifying information for each subsequent endorsing institution
## Footnote
Includes paying bank indorsement information and return reason, which matches return reason in Type 31 record.
102
Why is understanding the use of these detail records important?
Understanding the use of these detail records is the key to understanding the process flow of an imaged check and its associated electronic indorsements.
103
What is the On-Us field?
Located between Amount and Routing fields, based on ANSI X9.100-160 standard
## Footnote
The On-Us field typically contains the account number and optionally, a serial number and/or transaction code.
104
What does the On-Us field typically contain?
Account number and optionally:
* Serial number
* Transaction code
## Footnote
The design of the On-Us field can vary from bank to bank.
105
What is the purpose of ANSI X9.100-187?
To accommodate variability of data and position of On-Us field, requires truncating bank to capture entire On-Us field from physical check
## Footnote
This ensures that the entire On-Us field is included in the image file.
106
What does truncating the bank do?
Places entire On-Us field from physical check into On-Us field in image file
## Footnote
The sequence remains the same as on the physical check.
107
What symbol represents the On-Us field?
Forward slash ('/')
## Footnote
This symbol is used to denote the On-Us field in the MICR line.
108
What character replaces those that cannot be interpreted in the On-Us field?
Asterisk ('*')
## Footnote
Dashes are included, unless agreed otherwise by exchanging institutions.
109
What is the Aux On-Us field?
Optional field to the left of the Routing Field on the MICR line on business-sized checks
## Footnote
It is generally used for the placement of consecutive serial numbers.
110
What does the Aux On-Us field indicate when present?
It is an optional variable format field to the left of the routing field or the EPC when an external processing code is present
## Footnote
Checks with Aux On-Us field are ineligible for conversion to ACH entries.
111
What does Nacha Operating Rules (Section 2.5.13.3) state about eligibility for ACH entries?
To be eligible must be a consumer account
## Footnote
Checks with Aux On-Us field are specifically excluded from conversion to ACH entries such as ARC, POP, and BOC.
