Understanding the ACH Network and Regulations | Exams Nursing | Docsity (2024)

Download Understanding the ACH Network and Regulations and more Exams Nursing in PDF only on Docsity! AAP EXAM 2024/2025 WITH 100% ACCURATE SOLUTIONS AAP EXAM 2024/2025 WITH 100% ACCURATE SOLUTIONS Samuel's Imports processes service fees electronically for returned checks. According to Regulation D, Samuel's must provide a notice to the customer prior to collecting any fees electronically. - Precise Answer ✔✔False Which Standard Entry Class Code (SEC) does UCC4A cover? - Precise Answer ✔✔CCD (credit) Ralph Smith has scheduled automatic transfers with all 8 of monthly debtors as a way to simplify his life. He set up a separate savings account to pay his bills. He provided each debtor his savings account number. After the sixth Third-Party debit Entry to this account the RDFI returned the remaining debits. The customer was very angry and wanted the RDFI to pay his late fees. The RDFI is within its right to return the Entries according to which regulation? - Precise Answer ✔✔Regulation D defines a non-transaction account as an account that allows no more than six Third-Party withdrawals per statement period. Which regulation pertains to consumer error resolution within 60 days of statement date? - Precise Answer ✔✔Regulation E Uniform Commercial Code Article 4A primarily addresses: - Precise Answer ✔✔Wholesale ACH credit transactions and wire transfers be governed by California law since their headquarters resides there. Can the Choice of Law section of the agreement be changed? - Precise Answer ✔✔Yes Regulation E addresses all of the following, except: - Precise Answer ✔✔Wire Transfers How long must the Originator of a single Entry TEL keep an authorization? - Precise Answer ✔✔Two year from date of authorization According to UCC4A, a RDFI needs to provide a disclosure to it's customers on? - Precise Answer ✔✔Provisional Payment and notice of Payment Which of the following is not used to determine a "commercially reasonable" security procedure for the purposes of UCC 4A? - Precise Answer ✔✔A) Institution size B) Transaction type Correct answer C) Originator's creditworthiness D) Frequency of transactions What are the two reasons an ODFI can Dishonor a Return Entry? - Precise Answer ✔✔A) Fraud, Contested B) Rejection, Dishonor Correct answer C) Untimely, Incorrect information D) Preauthorized debit agreement, Untimely Which SEC Code would have to comply with Regulation E regarding ATM and one time debit card transactions? - Precise Answer ✔✔SHR Uniform Commercial Code Part 210 requires RDFIs to provide Corporate customers with certain notices for credit Entries. - Precise Answer ✔✔False Per UCC 4A, a contract between a bank and customer may limit liability to the bank unless: - Precise Answer ✔✔the bank demonstrated "lack of good faith" or failure to exercise ordinary care A fraudulent ACH file is sent from a company to a bank. Which of the following address this scenario? - Precise Answer ✔✔UCC 4A Megabank outsources all of it's ACH services to XYZ Processing, who originates for twenty-one other FI's. In return for a reduced processing rate, Megabank allows XYZ Processing to use it's routing number to submit files to the ACH Operator for all twenty-one originators. Is this a Direct Access relationship? - Precise Answer ✔✔Yes All should be considered when a Participating DFI creates a contingency plan, except: - Precise Answer ✔✔correct answer: A) RDFI file processing times B) Natural Disasters C) Lost files D) Late Delivery of files from originating company What is the minimum amount of loss a Participating FI must suffer in order to file a compensation claim? - Precise Answer ✔✔At least $200.00 What is the ODFI's reporting requirements for unauthorized debits? - Precise Answer ✔✔1% per originator What type of risk occurs when one funds transfer system participant is unable to settle their commitments causing them to fail? - Precise Answer ✔✔Systemic Point of Purchase (POP) entry detail on a receipt must include which of the following: - Precise Answer ✔✔A) Customer Name correct answer B) Terminal City C) Store Number D) Transaction Type If an ODFI fails to register a Direct Access relationship, are they subject to a fine? - Precise Answer ✔✔Yes An RDFI can refuse to accept IAT entries if the Board of Directors has made it a part of the ACH policy. - Precise Answer ✔✔False Company Name Field in order for it to appear correctly on Mrs. Parson's statement? - Precise Answer ✔✔Mindy's Lighting Location of the Originator and Beneficiary determines when an IAT transaction is to be used. - Precise Answer ✔✔False Super National Bank transmits to its ACH Operator an ACH file with an effective entry date falling on Martin Luther King, Jr Day. The bank will open on this day; however, its ACH Operator will not be open. The RDFIs receiving the transactions may be open. On what day will the ACH file originated by Super National Bank settle? - Precise Answer ✔✔All entries will settle on the next business day after Martin Luther King, Jr. Day The movement of fraudulent or illegal payment transactions from one payment system to another (for example a check payment to ACH) is which type of risk? - Precise Answer ✔✔Cross-Channel Risk Risk that a party to a transaction cannot provide the necessary funds as contracted for settlement to take place on the scheduled date. - Precise Answer ✔✔Credit Risk How often must a Participating DFI, Third-Party Sender or Third-Party Service provider conduct a Rules Compliance Audit? - Precise Answer ✔✔All Participants must conduct an Audit Annually What is contained in Article One? - Precise Answer ✔✔General Rules What is contained in Article Two? - Precise Answer ✔✔Rights & Responsibilities of ODFIs, their Originators and Third Party Senders What is contained in Article Three? - Precise Answer ✔✔Rights & Responsibilities of RDFIs and their Receivers What is contained in Article Four? - Precise Answer ✔✔Rights & Responsibilities of ACH Operators What is contained in Article Five? - Precise Answer ✔✔Rights & Responsibilities of Gateways for IAT Entries What is contained in Article Six? - Precise Answer ✔✔Rights & Responsibilities of the National Association What is contained in Article Seven? - Precise Answer ✔✔Settlement What is contained in Article Eight? - Precise Answer ✔✔Definitions of Terms Used in these rules. ACH Payment Acknowledge - Non Monetary (Acknowledges CCD Credit Entry). Implemented in 1997 - Precise Answer ✔✔ACK Automated Account Advice - Non-Monetary - Agreement - ODFI/RDFI & ACH Operator - Precise Answer ✔✔ADV Accounts Receivable Entry - Debit / Single Entry - Consumer or Non Consumer, Written Notice = Authorization, - Precise Answer ✔✔ARC Who are the basic participants in the check collection process? - Precise Answer ✔✔Payor, Payee, Payee's DFI, Correspondent Bank, Payor's DFI How does an ACH Payment Entry flow? - Precise Answer ✔✔Originator, ODFI, ACH Operator, RDFI, Receiver The worlds oldest form of payment is what? - Precise Answer ✔✔Check What rules specify uniform rights and responsibilities of participants involved in EBT transactions? - Precise Answer ✔✔Quest Operating Rules Transactions processed individually, in real time, and settled by debiting a Federal Reserve account of the sending Financial Institution and simultaneously crediting the Federal Reserve account of the Receiving Financial Institution are using which payment system? - Precise Answer ✔✔Fedwire Funds Services Check Processing Laws are federal based - Precise Answer ✔✔False Who develops format requirements and data specifications for the different EDI standards used by corporate originators and their FI's? - Precise Answer ✔✔Accredited Standard Committee (ASC) X12 A company or individual that has been authorized by the receiver to initiate either a credit or debit ACH entry to their account. - Precise Answer ✔✔Originator A financial institution that receives payment instructions from Originators and forwards the entries to the ACH Operator - Precise Answer ✔✔Originating Depository Financial Institution (ODFI) ACH Payment Transaction are accumulated throughout the day sent to the ACH Operator, sorted by destination, and transmitted in groups at specified times. - Precise Answer ✔✔Batch Process, store-and-forward system Financial institution identified by the routing number encoded on the MICR line of a check. - Precise Answer ✔✔Paying Bank (payor's depository financial institution) A financial institution that receives ACH entries from the ACH Operator and posts the entries to the accounts of its depositors. - Precise Answer ✔✔Receiving Depository Financial Institution (RDFI) The central clearing facility for ACH transactions. - Precise Answer ✔✔ACH Opertor A voluntary association of depository institutions that facilitate the clearing of checks or electronic items through the direct exchange of funds between members. - Precise Answer ✔✔Clearing House An entity that issues a credit or debit card to the cardholder. - Precise Answer ✔✔Card Issuer The party to whom a check is made payable. - Precise Answer ✔✔Payee A person or entity that is issued a credit or debit account that is accessed through the use of a card. - Precise Answer ✔✔Cardholder The national trade association for electronic payments, which establishes the rules, industry standards and procedures governing the exchange of commercial ACH payments by depository financial institutions. - Precise Answer ✔✔NACHA - The Electronic Payment Network An optional variable format field of the MICR line of a check. - Precise Answer ✔✔Auxillary on-us field Payment system to which real-time gross settlement applies. - Precise Answer ✔✔Wire Transfer Payment System Name the clearing and settlement methods for checks. - Precise Answer ✔✔1. Direct Presentment 2. Federal Reserve Bank 3. Clearing House 4. Correspondent Payment system governed by the electronic funds transfer act, Reg Z, Visa, Mastercard, and Fair Credit Billing. - Precise Answer ✔✔Card Payment System Payment system governed by UCC 4A, OFAC, Reg J, Reg CC, OCC, 235, and FRB Risk Policy. - Precise Answer ✔✔Wire Transfer Payment System Payment system governed by the ACH Rules, UCC 4, UCC 4A, Electronic Funds Transfer Act, Reg E, The Right to Financial Privacy, Reg D, and Reg CC. - Precise Answer ✔✔ACH Network Two services provided by Fedwire - Precise Answer ✔✔1. Funds Service 2. Securities Service SCOPE - Precise Answer ✔✔Special Committee On Paperless Entries The year and location of the first ACH Association - Precise Answer ✔✔1971 - California A method used by the ODFI requiring a non-public-rated originator to ensure funds are available prior to settlement of an ACH transaction. - Precise Answer ✔✔Prefunding The year ANSI formed accredited standards committee (ASC) x12 - Precise Answer ✔✔1979 Examples of financial EDI - Precise Answer ✔✔1. Vendor Express 2. State Tax Payments 3. Child Support Payments 4. Health Care Claim Payments Article One - Precise Answer ✔✔General Rules - covers general information about the application of the rules. Article Two - Precise Answer ✔✔Rights & Responsibilities of ODFIs, their originators and third party senders - covers the prerequisites to origination, authorization and notice, general warranties and liabilities, provisions for specific types of entries including SEC code, prenotes, reversals, reclamations, designated data, and ODFI reporting requirements. Also includes ODFI action to NOCs and returns and obligations of Third Party Senders. Article Three - Precise Answer ✔✔Rights & Responsibilities of RDFIs and their Receivers - includes general warranties and liabilities, statement requirements, timing and funds availability, provisions for receipt of certain types of entries, prenotes, reclamations, stop payments, returns, NOCs, acknowledgments, recredit, WSUD and extended return entries. Article Four - Precise Answer ✔✔Right & Responsibilities of ACH Operators - includes agreements and risk management, settlement, file delivery, file repair, return/rejection, operator actions on reversals, record retention, and optional operator services. Article Five - Precise Answer ✔✔Rights & Responsibilities of Gateways for IAT entries - includes agreements, authorizations, compliance with U.S. law, and warranties & obligations specific to inbound and outbound transactions. Article Six - Precise Answer ✔✔Rights & Responsibilities of the National Association - covers use and disclosures of designated data, indemnity by NACHA and limitation of liability. Article Seven - Precise Answer ✔✔Settlement - includes maintenance of reserve bank account, settlement procedures, effect of settlement, accountability, effect of closing time on settlement, non-settled entries. Article Eight - Precise Answer ✔✔Definition of Terms used in the NACHA Operating Rules & Guidelines. This section defines the terms as used in the NACHA operating rules & guidelines.