Exam Prep 1

Question 1

What are the primary functions of NACHA?

Answer 1

To provide a clearing house platform and structure/rules for paperless entries/payments.

Question 2

Who are the current ACH Operators?

Answer 2

The Federal Reserve Bank and Electron Payments Network (EPN)

Question 3

What is the function of an ACH Operator?

Answer 3

Editing ACH entires for ODFIs/Originators and providing settlement between ODFIs and RDFIs

Question 4

Do all participating financial institutions originate ACH payments?

Answer 4

No. Some participating FIs only receive ACH payments/entries.

Question 5

What is a Sending Point?

Answer 5

An organization that transmits entries to an ACH Operator on behalf of an ODFI. Can be a participating DFI or a Third-Party Service Provider acting on behalf of an ODFI, or an ODFI transmitting its own entries.

Question 6

What two banking conventions significantly advanced check processing?

Answer 6

Routing numbers (adopted by ABA in 1911) and MICR line (Magnetic Ink Character Recognition)

Question 7

POS is done in an ________ environment.

Answer 7

Non-shared

Question 8

SHR is done in an ________ environment.

Answer 8

Shared (Agreement between FIs or at the same FI)

Question 9

How many Addenda records can an IAT entry have at maximum?

Answer 9

12 addenda records; 7 mandators, 5 optional