Federal Reserve Operating Cir. 4 Flashcards
What is the primary purpose of the Federal Reserve Operating Circular 4?
To provide guidelines and procedures for the Federal Reserve’s check collection and processing.
True or False: Operating Circular 4 applies only to the collection of checks.
False
Fill in the blank: Operating Circular 4 is a part of the Federal Reserve’s __________ system.
payment
What types of items does Operating Circular 4 cover?
Checks, electronic items, and other payment services.
Multiple Choice: Which of the following is NOT covered by Operating Circular 4? A) Checks B) Wire transfers C) Electronic items D) Returned checks
B) Wire transfers
What does Operating Circular 4 define as a ‘check’?
A negotiable instrument that is drawn on a bank and payable on demand.
True or False: Operating Circular 4 includes information on the responsibilities of financial institutions.
True
What entity issues Operating Circular 4?
The Federal Reserve.
Fill in the blank: The Federal Reserve Operating Circular 4 was designed to enhance __________ in check processing.
efficiency
Short Answer: Name one key change introduced in the latest revision of Operating Circular 4.
Improvements in electronic check processing.
What is the significance of the term ‘presentment’ in Operating Circular 4?
It refers to the process of presenting a check for payment.
Multiple Choice: Which of the following best describes ‘return items’ under Operating Circular 4? A) Items that are accepted B) Items that are rejected C) Items that are processed D) Items that are forwarded
B) Items that are rejected
True or False: Operating Circular 4 allows for the electronic presentment of checks.
True
What does the term ‘endorsement’ refer to in the context of Operating Circular 4?
The signature or stamp on the back of a check indicating transfer of ownership.
Fill in the blank: Operating Circular 4 provides guidelines for __________ checks.
returned
Short Answer: What role does the Federal Reserve play in the check collection process?
It acts as an intermediary between banks to facilitate the collection and settlement of checks.
What is the term for the timeframe within which a check must be presented for payment according to Operating Circular 4?
Timely presentment.
True or False: Operating Circular 4 is legally binding for all financial institutions.
True
Multiple Choice: Which of the following is a key objective of Operating Circular 4? A) To increase fees B) To standardize check processing C) To limit electronic payments D) To reduce fraud
B) To standardize check processing
What is the ‘check adjustment’ process described in Operating Circular 4?
A process to correct errors related to check processing.
Fill in the blank: Operating Circular 4 is part of a series of __________ issued by the Federal Reserve.
operating circulars
Short Answer: How does Operating Circular 4 address the issue of fraud in check processing?
It includes guidelines for recognizing and reporting fraudulent checks.
What is the role of the ‘depository institution’ in the context of Operating Circular 4?
It is the bank that receives checks for deposit and processing.
True or False: Operating Circular 4 includes provisions for international check processing.
False
Multiple Choice: Which aspect of check processing does Operating Circular 4 NOT focus on? A) Collection B) Presentment C) Electronic payments D) Return items
C) Electronic payments
