AAP Prep

FedNow

Which payment system is a real-time, gross settlement system?

6 Years

How long must a bank keep a copy of the items to which each XCK entry relates?

7 years

how long must the front and the back of the check be kept after initiating an RCK entry?

acquirer

a financial institution or entity that processes credit and debit card transactions on behalf of a merchant.

Example of a common ACH credit application

Share holder dividends

receiving point

a third party sender accepting ACH transactions on behalf of an RDFI

CTX

corporate SEC code that allows for multiple bills/invoices to be paid in one entry

copy of the front of the check

what is an originator of ARC entries required to retain?

gross

what type of settlement process is fedwire?

net

what type of settlement process is ACH?

third party service provider

Insurance R Us contracts with Creative Payments to generate an ACH debit file each month. Creative Payments then transmits the file to The Money Bank, whom Insurance R Us has an origination agreement with. What participant role does Creative Payments play in this scenario?

CIE

SEC code for a credit entry initiated by a consumer, typically through an online banking platform or billpay service

9,999 addenda records with 80 characters of payment-related information

how many addenda records can be transmitted with a CTX payment?

Nested Third Party Sender

ABC company has contracted with Best Payroll Processors to create and transmit their payroll file. Best Payroll Processors has further contracted with Perfect Payroll Processors to transmit their clients payroll files into the ACH network. Perfect Payroll Processors has an origination agreement with an ODFI. What participant role does Best Payroll Processors play in this scenario?

RCK, XCK, BOC

which SEC codes require the check serial number to be printed on a consumer Receiver’s statement?

XCK

what type of entry may an RDFI refuse to accept? (SEC code)

ACK

SEC code used for an acknowledgement entry for a CCD

ATX

SEC code for an acknowledgement entry for a CTX

Originator

An ODFI receives a request for a copy of an authorization for a transaction initiated by one of its Third-pa Senders. who is responsible for retaining the Receiver’s authorization?

direct access relationship

An Originator or a third party that transmits ACH files directly to an ACH Operator using a financial institution’s routing number or settlement account

1:30pm local time

On August 1, ABC Manufacturing creates its payroll file with an effective entry date of August 1. The file is sent to its ODFI who transmits it into the Network during the first same day ACH processing window. What time should ABC Manufacturing’s employees be able to withdraw their payroll funds on the settlement date?

Respond to an NOC in a timely fashion

Which of the following is an ODFI responsibility?

ODFI

when an ODFI utilizes a third-party service provider (Sending Point) in the origination process, which party warrants the entries are authorized?

State Contract Law

An ODFI is assessed a Class 2 Rules Violation resulting in a $100,000 fine and is now pursuing legal action against the Originator to recover the fine. Which provision would be used to interpret this dispute?

Originator

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?

180

according to the NACHA Operating Rules, what is the maximum timeframe (in days after the Settlement Date) an Originator may reinitiate a PPD entry that has been returned for insufficient funds?

E-Sign Act

outlines the requirements for an authorization to be considered “similarly authenticated”

They have no knowledge of the revocation of the Receiver’s authorization

Under the Nacha Operating Rules, an ODFI warrants:

ODFI and Third-Party Sender

The Perfect Company contracted with Save-A-Penny Payroll to create and transmit their payroll file. Save-A-Penny Payroll further contracted with Best Payroll Processors to transmit their clients files into the ACH Network. Best Payroll Processors uses Superior Credit Union’s ACH services. Which participants in this scenario are required by the Nacha Operating Rules to have an Origination Agreement in place with one another

its regulator’s requirements

what source must a financial institution use to conduct an ACH risk assessment?

10 business days

According to Reg E, an RDFI may require a consumer’s oral notice of an error to be confirmed in writing within how may days?

Originator

Which participant is required by Reg E to provide notice if they wish to collect a service fee electronically for a payment returned as insufficient or uncollected funds?

Reg E

provision that governs consumer dispute rights for ACH transactions

UCC 4A

Which of the following specifically addresses the need to cover commercially reasonable security procedures between an ODFI and Originator?

31 CFR Part 210

governs the processing of federal government ACH payments

protected amount

lesser than the sum of all benefit payments received or account balanced at the time of review (garnishments)

$1,000

On May 20, a garnishment order is received against an account holder for $2,000.00. The account review finds the balance in the account is $1,000.00 and there were two federal benefit payments deposited during the lookback period totaling $2,500.00. what is the protected amount to be established?

SDN list issued at the time of policy and procedure approval by the Board

which of the following is NOT included as part of a financial institution’s ACH OFAC polices and procedures?

OCC Bulletin 2021-49

applies to nationally chartered banks and addresses effective risk management

Transaction type

Which of the following is used to determine a “commercially reasonable” security procedure for purposes of UCC 4A?

DNE

initiated by the Federal Government ONLY as a means to notify the RDFI of a benefit recipient’s death

timeframe required for an Originator to notify their ODFI of errors

UCC 4A will allow an ODFI to alter this through its Origination Agreement (could make it a shorter timeframe)

constructive knowledge of the death

once an RDFI has this it must return all post-death benefit payments it receives under 31 CFR Part 210. this could include being notified by a survivor, estate, DNE, reclamtion, etc

CTR

required to be submitted for deposits of $10,000.00 or more in coin or currency

File a Suspicious Activity Report

An RDFI receives a large ACH credit on behalf of a small TPS who holds its account with them. this deposit is well outside of the TPS’s normal activity. what should the RDFI do?

120 calendar days

within what timeframe must federal agencies initiate a Notice of Reclamation after having actual or constructive knowledge of a death

60 days

what is the maximum amount of time from the issue date of a federal reclamation that an RDFI may provide a response?

favorably negotiated contract terms for ODFI

according to UCC 4A,the ODFI cannot alter provisions through its Origination Agreement that would result in what?

POP

unlike the Nacha Operating Rules, the Federal Government does NOT require written authorization for which SEC code? ( take a “notice equals authorization approach)

IAT

SEC code that adopted the Bank Secrecy Act’s Travel Rule?

OFAC

regulatory body that requires the RDFI to perform a review of all parties to an IAT entry including remittance and foreign correspondent bank information found in the addenda records

returns

primary credit risk for an ODFI originating ACH debit entries

Processing schedules

Which control should an ODFI implement to manage operational risk associated with its ACH Origination services?

Routing number

characteristic considered protected information under the Nacha Operating Rules?

protected information

non-public personal information including financial information used to create an ACH entry or contained in any related addenda record. examples include routing numbers, account numbers and SSNs

account numbers

An Originator with an annual volume of 2 million transactions or more must protect this by rendering it unreadable when storing electronically?

Operational Risk

type of risk where a transaction will be altered or delayed due to an unintentional error, either mechanical or human. represents the amount of loss related to unintentional errors, which may result in delayed, or duplicated or otherwise erroneous payments.

Board

entity that is required under the Nacha Operating Rules to approve a direct access relationship prior to the ODFI transmitting entries?

TEL & WEB

which SEC codes require Originators to verify both routing numbers and Receiver’s identity?

fraud & credit

which types of risks may have a greater impact on an ODFI vs an RDFI?

third-party risk

XYZ Bank’s processor has a power surge while transmitting return files to the ACH operator. What type of risk does this represent to XYZ Bank?

Arbitration

Which process under the Nacha Operating Rules is a mechanism for resolving disputes within the ACH network and bypassing the court system?

credit

monitoring an Originator’s ACH origination and return activity across multiple settlement dates helps an ODFI mitigate what type of risk?

third-party

an RDFI requests confirmation of its Receiving Point’s completed annual ACH audit. What type of risk does the RDFI hope to reduce?

prefunding

method that can decrease an ODFI’s exposure risk

physical

type of security that involves locks on a computer room and limiting access to it?

cross-channel

type of risk that occurs when fraudulent or illegal payment transactions move from one payment system to another? (ex: check to ACH)

90 days

what is the timeframe a Report of Possible Rules Violation must be submitted?

credit

type of risk that a party to a transaction will not be able to provide the necessary funds, as contracted, for settlement to take place on the scheduled date

ODFI, RDFI, TPS, TPSP

participants required to perform annual audits of ACH Rules Compliance

$250

minimum dispute amount required before the arbitration procedure can be used

$200

minimum compensation claim amount required before the compensation rules can be used

ACH Operator

participant that has the primary responsibility for controlling systemic risk?

systemic

type of risk that one funds transfer participant will not be able to settle causing other financial institutions down the line to not settle.

company name and company entry description

According to the Nacha operating rules, which of the following information must an RDFI include on a consumer’s statement?

opening of business the second banking day following settlement

a health care provider requests the payment related information in the addenda record of a CCD credit entry it received. according to the Nacha Operating Rules, when must they receive the information?

Payor, Payee, Bank of First Deposit, Correspondent Bank, Paying Bank

which of the following lists the participants in the check processing system?

Payor

check writer in the check processing system

correspondent bank

provides clearing/settlement services in the check processing system

operational

each wednesday, Micro Bank originates a Direct Deposit payroll file for one of its customers with a friday effective date. this week the file does not get originated. what kind of controls does Micro Bank need to put in place to prevent such occurrences in the future?

account number

Nacha operation rules require the RDFI to ensure, at a minimum that this is valid when they receive a prenote

60 calendar days

included in an ODFIs written response to Nacha regarding an Originator who has exceeded a return rate threshold or level is a plan for reducing the return rate to below the threshold within how many days of Nacha’s request?

RDFIs may send same-day returns regardless of whether the original was same-day

which statement is true regarding return processing in a same day environment?

6

a participating DFI must keep records for all ACH entries for how many years?

remittance addenda record

inbound IAT debit transactions used to fund a beneficiary residing outside of the US must identify the “ultimate beneficiary” in the:

third-party

smalltown bank has contracted with megabank to process its ACH files. because of this relationship, smalltown bank is exposed to what kind of risk?

$200

a compensation claim may be paid for an entry only if the loss suffered by the claimant is at least:

consumer check in the amount of $25,000.00

which of the following checks is eligible to be converted to an ARC, POP or BOC entry?

1 year

an RDFIs breach of warranty claim against an ODFI with respect to an allegation of unauthorized entry to a non-consumer account may include entries up to how long after the settlement date of the unauthorized entry?

$2,500

to be an eligible XCK entry, a check must be in amount less than:

company/batch header record

which ACH record contains the Company Entry Description field?

accepts a benefit payment

under 31 CFR Part 210, an RDFI establishes a contractual relationship with the Federal Gov when it:

exposure limits

technique that can be used by a financial institution to mitigate credit risk

reason for payment

to comply with the bank secrecy act, which information in an IAT transaction is required to travel with the payment throughout the process?

not liable for any entries sent by ODFI in error

an RDFI that posts ACH entries based solely on the account number is:

CCD & CTX

SEC codes that can be used for both zero-dollar entries and payment-related information

unauthorized return rate threshold

Nacha has the authority to begin a Rules Enforcement Proceeding and could assess fines if an Originator exceeds this

5 banking days from receiving notice of death

ABC company sends a monthly retirement payment and then receives notice that the retiree passed away two weeks prior to the payment date. how many days does ABC company have to initiate a reclamation entry or written demand for payment?

origination agreement

an ODFI may require an Originator to send a prenote by including the requirement in its:

WEB credit

financial institutions offering person-to-person (P2P) payments are required to use the SEC code