Questions I missed

Question 1

What are the two reasons an ODFI can Dishonor a Return Entry?

Answer 1

Untimely, Incorrect information

Question 2

Megabank received a POP Entry for Mrs. Smith. The next day the check was presented for payment. The banks system captured the check as a duplicate check

Answer 2

Return the POP entry as R37 . No documents are required.

Question 3

An RDFI has the right to Contest a Dishonored Return Entry

Answer 3

The RDFI used the wrong Return Reason code in first Return Entry

Question 4

Which SEC Code can a RDFI reject at its sole discretion?

Answer 4

XCK

Question 5

If an ODFI calls and asks an RDFI to return an entry, what should the RDFI do?

Answer 5

If the RDFI decides to comply with the ODFI’s request, return the entry using Return Reason Code R06 after receiving a Letter of Indemnification from the ODFI

Question 6

The R11 Return Reason Code is used for a

Answer 6

Incomplete Transaction

Question 7

An unauthorized CCD debit was discovered on a business statement. How long does the RDFI have to return this debit entry through the ACH Network?

Answer 7

The return must be made available to the ODFI by opening of business on the 2nd banking day after Settlement Date of the original entry

Question 8

A TEL entry can be returned for

Answer 8

Authorization Revoked by Customer R07, Customer Advises Not Authorized R10, Stop Payment R08

Question 9

Notification of Change Entries can only be initiated by the RDFI?

Answer 9

True

Question 10

When a Federal Reserve Bank is used for check collection process, which Regulation governs?

Answer 10

Regulation J

Question 11

ACH Network supports Financial EDI in all of the following except Creating SEC Codes which support EDI information, Allowing payment related data to be included in addenda records, Supporting the Federal Governments Vendor Express program, Allows American National Standards Institute to create specific EDI companies

Answer 11

Allows American National Standards Institute to create specific EDI companies

Question 12

Who develops format requirements and data specifications for the different EDI standards used by corporate Originators and their Financial Institutions?

Answer 12

Accredited Standards Committee ASC X12

Question 13

Check processing laws are Federal based.

Answer 13

False

Question 14

What does EBT stand for?

Answer 14

Electronic Benefits Transfer

Question 15

What is the settlement process of a Fedwire and an ACH file?

Answer 15

Fedwire is a gross settlement system and ACH is a net settlement system

Question 16

Which regulation states that funds deposited by means of electronic payment must be made available to the consumer no later than the business day following the banking day on which the bank received the electronic payment?

Answer 16

Reg CC

Question 17

According to UCC4A, a RDFI needs to provide a disclosure to its customers on?

Answer 17

Provisional Payment and Notice of Payment

Question 18

What is used to determine a commercially reasonable security procedure for the purposes of UCC 4A?

Answer 18

Institution size, transaction type, frequency of transactions

Question 19

Primary control of systemic risk is the responsibility of

Answer 19

the Federal Reserve

Question 20

What is the maximum fine for a 3rd recurrence of a Class 1 Rules Violation?

Answer 20

Up to $5,000

Question 21

If contacted by Nacha under the ODFI Return Reporting Provision, how may days does an ODFI have to work with its Originator Third Party Sender to reduce the return rate for Administrative Return Rate and or Overall Return Rate entries below the applicable Return Rate level before being subject to a rules enforcement proceeding?

Answer 21

30 days

Question 22

The time frame for submitting a Report of Possible Rules Violation is

Answer 22

within 90 days of the occurrence

Question 23

If an ODFI receives a notice from NACHA requesting specific information on an Originator with high return rates, the ODFI must reply within

Answer 23

10 banking days of the receipt of the request

Question 24

The maximum penalty for a Class 2 violation of the ACH Rules under the National System of Fines is

Answer 24

Up to $100,000 per month until problem is resolved

Question 25

Can a CCD Entry be a nonmonetary Entry?

Answer 25

Yes

Question 26

To help mitigate risk, ODFIs must establish separate exposure limits for Originators who initiate WEB Entries.

Answer 26

False

Question 27

Each Originator of a BOC Entry is required to retain a copy of the source document for two years from the purchase date.

Answer 27

False

Question 28

The Originator of a WEB Credit is required to enter into an origination agreement with the ODFI.

Answer 28

False

Question 29

When delivering a TEL entry notice, the Originator must

Answer 29

Provide the receiver with written notice confirming the oral authorization prior to the settlement of the entry

Question 30

Which of the following statements are true regarding Federal Reserve accounts? A. Only those Financial Institutions which use a Federal Reserve Bank as their ACH Operator are required to maintain or have access to, through a correspondent, an account at the Federal Reserve Bank. B. Financial Institutions must maintain sufficient balances in these accounts to cover net settlement amounts. C. Settlement through the Federal Reserve account precludes a Financial Institutions from pursuing legal recourse for any return or adjustment Entry. D. None of the above

Answer 30

Financial Institutions must maintain sufficient balances in these accounts to cover net settlement amounts.

Question 31

Which payment system is a debit pull system with regard to payments, where the sender initiates the transfer and then payments are automatically debited from the Beneficiary Bank’s Federal Reserve Bank account?

Answer 31

Fedwire Securities transfers

Question 32

If an ODFI requests a copy of a Written Statement of Unauthorized Debit (WSUD) within 1 year of the date of the initiation of the adjustment Entry; how long does the RDFI have to send a copy of that WSUD to the ODFI?

Answer 32

10 days

Question 33

What type of payment card is not a true payment instrument?

Answer 33

Credit Card

Question 34

Who controls Systemic Risk in the ACH Network?

Answer 34

The Federal Reserve Bank

Question 35

Which of the following is NOT a field minimally included in the Acknowledgment Entry File Header Record from the ACH Operator for each file that was not rejected by the ACH Operator? A. Immediate Origin B. File ID Modifier C. Settlement Date D. Total Debit Entry Dollar Amount in File

Answer 35

Settlement Date

Question 36

The return code R37 may be used to return items with which two SEC codes? A. PPD, POP B. ARC, POP C. ARC, RCK D. POP, RCK

Answer 36

ARC, POP The return code R37 Source Document Presented for Payment can be used for items with the SEC code ARC and POP as well as BOC. Source Documents Presented for Payment to which an RCK relates must use return code R53.

Question 37

Authorization for a recurring Telephone-Initiated Entry include all but one of the following. A. Oral authorization B. Copy of Authorization must be sent to the Receiver C. Authorization must be signed or similarly authenticated by the Receiver D. Receiver must initiate the call if there is no existing relationship.

Answer 37

Authorization must be signed or similarly authenticated by the Receiver Authorization from the Receiver must be recorded and/or written notice must be provided to Receiver prior to Settlement. The authorization does not have to be signed by the Receiver.

Question 38

Which of the following codes allows a Financial Institution to determine whether an item has been originated by the federal government or by a private sector Originator? A. Service Class Code (SCC) B. Standard Entry Class Code (SEC) C. Originator status code D. Record type code

Answer 38

Originator status code

Question 39

ABC Bank on-boarded a new Originator. During the on-boarding process, ABC Bank determined that the Originator; Sandy Property Management Co., is a Third-Party Sender. When should ABC Bank notify Nacha of their new TPS?

Answer 39

Within 30 days on onboarding the TPS

Question 40

Which of the following is not a benefit of Direct Deposit? A. Increased productivity B. Reduced disbursement float C. Additional employee benefit D. Reduced risk of fraud

Answer 40

Reduced disbursement float

Question 41

What is the correct definition of a credit card?

Answer 41

Access devices to a lending product, cleared through the Visa MasterCard, American Express, or Discover networks. Transactions are authorized realtime. Settlement for merchants is guaranteed and typically next-day. Not considered a true payment instrument.