General Rules Flashcards
A Participating DFI must comply with NACHA rules and Warrants that it is. ______ ________ to comply with all applicable requirements of the rules
Legally Able
How often must a participating DFI conduct an audit of its compliance with the rules
Annually, prior to December 31st
The compliance audit must be performed under the instruction of.. (4)
Audit Committee
Audit Manager
Senior Officer
Independent External Examiner or Auditor
How long must a DFI, TPSP, TPS retain proof of audit?
6 Years
Upon the Receipt of NACHAs request, the DFI must provide proof of audit(s) within ____
10 banking days
Failure to provide proof of a DFI, TPSP or TPS annual audit may be considered
Class 2 Rules Violation
In Regards to Risk Assessment, a DFI and TPS must Complete a risk assessment of their ACH activities and (2)
- Implement risk management program on the basis of such an assessment
- Comply with all regulator requirements with respect to the Risk Assessment and Program
A DFI must retain record of each entry for a period of ___
6 Years
Each non-consumer originator, DFI, TPSP, and TPS must establish, implement and update as appropriate P and P, and systems with respect to __(1)____, ____(2)______, and ______(3)____ of ACH Entries
Processing
Initiation
Storage
Three General Security Requirements of DFI, Non Consumer Originator, TPSP, TPS, relating to Protected Information
- Protect the confidentiality and integrity until its destruction,
- Protect against anticipated threats to the security or integrity of protected information
- Protect against Unauthorized Use that can result in substantial harm to a natural person
Non-Consumer Originators, TPSP, and TPS, who’s ACH volume exceeds 2 million annually, must Protect DFI account numbers used for the initiation of entries by__(1)_____, prior to ________(2)________
rendering them unreadable when stored electronically
By June 30th of the following year
An FI must register contact information for departments responsible for (2)
ACH Operations
Fraud and/or Risk Management
What contact information for departments responsible for ACH Operations and Fraud Management must an FI Register with NACHA?
Name, Title, Email, Phone for a primary and secondary contact persons, or
General Department Contact Information (email and phone number that will be answered during business hours)
ODFI Risk Management, Fill in the Blank:
An ODFI must perform due diligence with respect to an originator or TPS, sufficient to form a reasonable belief that ____
The originator and TPS have the capacity to perform its obligations in conformance with the rules
In addition to performing due diligence on an originator/TPS , on ODFI must also (3)
Assess the nature of the ACH activity and the risk it presents
Establish, implement and periodically review the exposure limit
Establish procedures to: (a) Monitor Exposure limits and returns over across a period of multiple days (b) enforce exposure limits and origination restrictions
An originator must provide each Receiver with an electronic or hard copy of the receivers authorization for all debit entries to be initiated to a ___(1)___ account
Consumer
Which ACH Paricipant Warrants the Following?
- Entry complies with the rules
- Entry is not originated on behalf of a suspended Originator/Third Party Sender
- The Entry Contains Required Information
- Credit Entry is Timely
- Debit Entry Satisfies an Obligation, Corrects an Error, Reclaims an amount received after death
ODFI
After sending a Pre-notification Entry, when can the Originator initiate subsequent entries?
The third banking day following pre-note settlement date
(Provided there has been no NOC or Return received for the pre-note)
What are the requirements to initiate a Micro-Entry?
The Credit must not exceed $1.00
One or more debit must not exceed the credit amount
The Company Entry Description must be ACCTVERIFY
Settlement for Debit Micro Entries must be originated simultaneously
After initiating a Micro-Entry
When can the Originator transmit subsequent entries?
As soon as the originators process for verifying the amounts has been completed.
What are the requirements for initiating a Reversal File?
A corrected file must be initiated simultaneously for an erroneous file
Must be transmitted within 5 Banking days from original file’s settlement
Must be transmitted within 24hr of learning of the erroneous file
Who can Transmit Reversal Files?
An ODFI, or ACH Operator
Who can transmit a Reversal Entry?
ODFI
ACH Operator
Originator
Third Party Sender
What are the requirements to transmit a Reversal Entry?
- Must be transmitted within 5 banking days of the erroneous entry’s settlement date
- Originator must make a reasonable attempt to notify the Receiver of the error - prior to reversal entry settlement
- The word REVERSAL must be included in Company Entry Description
- Name of the Originator, Amount and SEC code must remain unchanged
What is an erroneous entry?
- Duplicate Entry
- Orders payment to or from a receiver, that are different than what the receiver intended to be credited or debited by the originator
- Order payments in a dollar amount that is different than what was intended by the originator
- Payroll Entry that was transmitted prior to the termination of an employee, where the employee was compensated via Check
When must corrections be made to an entry, after an NOC is received?
Within 6 Banking days, or prior to initiating a subsequent entry, whichever is later
When changes be made to an entry after receiving an NOC for a Prenotification entry?
Prior to initiating a subsequent entry if the NOC was received within two banking days following settlement date
Under what circumstances can an Originator reinitiate an Entry?
- The entry was returned as a stop payment, and the receiver has authorized the reinitiated entry
- The entry was returned due to insufficient funds
- The receiver and originator have taken action to remedy the reason for return
What are the requirements for a Reinitiated Entry?
- Must be transmitted within 180-day after settlement of the original entry
- The company entry description must be RETRY PYMT
- Cannot be reinitiated more than 2x, following the initial return.
Under what circumstances can an originator transmit a Return Fee Entry?
- The entry was returned due to NSF (R09, or R01)
- Authorization from the received was collected at the time of collecting authorization for the original entry
- RETURN FEE must replace the company entry description
- Must have a settlement date of 45 days of the original return entry
- The entry was not transmitted as a response to a returned - return entry fee.
Fields in a File Header Record
[M] Record Type Code: ‘1’
[M] Priority Code: ##
[M] Immediate Destination: _######### (1 Blank + Routing)
[M] Immediate Origin: _######### (1 Blank + Routing)
[M] File Creation Date: YYMMDD
[O] File Creation Time: HHMM
[M] File ID Modifier: 1 Alphameric, Capital
[M] Record Size: ‘094’
[M] Blocking Factor: ’10’
[M] Format Type: ’1’
[O] Immediate Destination Name: 23 Characters
[O] Immediate Origin Name: 23 Characters
[O] Reference Number: 8
101 123456789 987654321 2401010330A094101Immediate Destination Immediate Origin 12345678
Fields in a File Control Record
[M] Record Type Code: ‘9’
[M] Batch Count: ######
[M] Block Count: ######
[M] Entry / Addenda Count: ########
[M] Entry Hash: ##########
[M] Debit Total: ############
[M] Credit Total: ############
[M] RESERVED - Blank 56-94
9000001000001000000010012345678000000000000000000010000
Fields in a Company Batch Header Record
[M] Record Type Code: ‘5’
[M] Service Class Code: ### (200 Mix, 220 CR, 225 DR)
[M] Company Name:16 Characters
[O] Company Discretionary Data: 20 Characters
[M] Company ID: 10 Characters
[M] SEC Code: 3 Characters (Capitalized)
[M] Company Entry Detail Description: 10 Characters
[O] Company Descriptive Date:
[R] Effective Date: YYMMDD
[M] Settlement Date: ###
[M] Originator Status Code: 2 Federal Gov, 1 All others
[M] ODFI ID Number: ######## (Routing -ck digit)
[M] Batch Number: #######
5225Company Name Includes Bonus 1234567890PPDDecPayroll 2412313651123456780000001
Fields in a Company Batch Control Record
[M] Record Type Code: ‘8’
[M] Service Class Code: ### (200 Mix, 220 CR, 225 DR)
[M] Entry + Addenda Count: ######
[M] Entry Hash: ##########
[M] Company ID: 10 Alphameric
[M] Total Debits: ############
[M] Total Credits: ############
[O] Message Authentication Code: 19 Alphameric
[M] Reserved: 6 Blank
[M] ODFI ID Number: ########
[M] Batch Number: #######
822000000100123456781234567890000000010000000000000000 123456780000001
True or False:
When posting an entry and originating an NOC, the entry liability changes from the ODFI to the RDFI
TRUE
What is the only Entry type that can be rejected by an RDFI due to the SEC code.
XCK-Destroyed Check Entries
As Return Code:
R33 - Return of XCK Entry (within 60 Days)
R20 - Non Transaction Account (within 2 Days)
Define 2 Day Return Time Frame
The return is made available to the ODFI no later than opening of business on the second banking day following the settlement date.
Define Extended Return Time Frame (60 Days)
The return is made available to the ODFI no later than the opening of business on the banking day following the 60th calendar day following the settlement date.
Today Bank received a credit with a settlement date of 12/26/2024 on Christmas Eve, and posted it to their clients account on 12/24 as a curtesy.
The customer has called the bank at 3pm on Christmas eve to notify them that this credit does not belong to them.
When can Today Bank return the entry?
On or after the entry’s Settlement Date, an entry cannot be returned prior to it’s settlement date.
The following Return Codes have what in common?
R01 - NSF
R02 - Account Closed
R03 - Unable to Locate Account
R04 - Invalid Account Number
R08 - Stop Payment
R09 - Uncollected Funds
R12 - Account Sold
R16 - Account Frozen
R17 - File Edit Criteria (something wrong with file)
R20 - Non Transaction Account
R24 - Duplicate Entry
R39 - Source Document no Eligible
They have a 2-day return time frame
What is the return time frame for a credit transaction, and what return code do you use?
Within 2 banking days following notice from the receiver to return the transaction
R23 - Credit Entry Refused by Receiver
What is the Difference Between R14 and R15?
R14 - Rep Payee is Deceased
R15 - Beneficiary / Account Holder Deceased
What is a Rep Payee?
A person or institution authorized to accept entries on behalf of another person(s), such as incapacitated adults or minors.
What return codes have a non-defined return time frame?
R06 - ODFI Requested the Entry be Returned
(ODFI has requested an entry to be returned - the RDFI does no have to comply)
R31 - Permissible Return Entry
(ODFI Grants the RDFI permission to return a
CCD CTX entry past the 2 day return time frame)
What are the three types of Third Party Service Providers, and what are their roles?
Third Party Service Provider: An organization that performs any function on behalf of the Originator, ODFI or RDFI
Third Party Sender: A Type of TPSP that transmits entries between an originator and ODFI
Nested TPS: A TPS that has an agreement with another TPS, not the ODFI
Consumer Debit Authorization must include at least the following (7) pieces of information…
- Language whether the debit is a single entry, recurring or subsequent
- The amount or method by which the amount will be determined
- Entry Frequency – including starting and end date
- Receiver Name
- Authorization Date
- Account Number and Type of Account
- How the received can revoke authorization
What are the minimum requirements of an ODFI and Originator Agreement? (6)
Originator authorizes the ODFI to originate entries on their behalf
Agree to be bound by NACHA rules
Agrees to not originate entries that violate US Laws
Any origination restrictions (SEC Codes permitted)
Right of the ODFI to suspend the agreement due to a breach of rules
The right of the ODFI to audit the Originator
Main differences between and ODFI/Originator agreement, and an ODFI/TPS
Lists restrictions on nested TPS
The ODFIs rights to audit the TPS, plus any nested TPS
The TPS must enter into agreement with all originators
The TPS must enter into agreement with all nested TPS
What type of Entries do not require authorization?
A Credit entry for which both originator and receiver are natural persons
An entry’s trace # consist of ____ digits
What do the first 8 positions mean?
15 digits
The ODFI’s routing number, minus the check digit
What is an overlay service?
A way for a payments transaction to be processed by an additional service or tech that operates on top of existing infrastructure.
They make payments easier for consumers and can be stand-alone product (e.g. Venmo)
Clearing and settlement are common across all payment methods, what do these terms mean?
Clearing: messaging to reconcile + verify payment details for transaction validation
Settlement: the final transfer of funds to complete the transaction
What is a company entry description?
Describes the purpose of payment on a batch and appears on a consumer statement
What does “Faster Payments” mean?
A payment by which the transmission and availability of final funds to the payee occur in real time (close to real time) or near 24/7
Effective vs Settlement Date
Effective date is assigned by the originator. On which it intends a batch of entries to post to the receiver account.
Settlement date is assigned by an ACH operator, it is the day that the ODFI + RDFI accounts are scheduled to be debited or credited by the federal reserve
Calendar Day, vs, Business Day, vs, Banking Day
Calendar: every day including weekends + holidays
Business: calendar days excluding weekends and holidays
Banking: any day and FI is open to the public for most functions and the facilities of an ACH operator are being operated.
What are the (3) general authorization requirements for all Entries
Must comply with any applicable legal requirements
Must be readily identifiable as an ACH authorization
Must have clear and understandable terms
Fill in the Blank:
ACH payments are processed using a ___(1)____, ___(2)___, and _____(3)____ process
Batch
Store
Forward
An ODFI must perform due diligence with respect to the Originator, or with respect to the Third-Party Sender with which it has an Origination Agreement, sufficient to form a reasonable belief that the Originator or TPS has the capacity to perform its obligations in conformance with the Rules.
In addition to this, the ODFI must…
1) assess the nature of their ACH activity and the risks it presents
2) establish, implement, and periodically review an exposure limit for them
(3) establish and implement procedures to:
(a) monitor the origination and return activity across multiple Settlement Dates;
(b) enforce restrictions on the types of Entries that may be originated; and
(c) enforce the exposure limit.
In an IAT transaction when is a financial agency involved in a payment transaction?
- Holds an account that is credited or debited as part of the payment transaction; or
- Receives payment directly from a Person or makes payment directly to a Person as part of the payment transaction; or
- Serves as an intermediary in the settlement of any part of the payment transaction.
What is the formula to “help” determine if something should be an IAT?
IAT = Payment Transaction
(Instructions + Settlement)
+ Financial Agency (Beyond U.S. Jurisdiction)
+ U.S. ACH Network
What data is “carried” for BSA’s Travel Rule?
BSA’s “Travel Rule” include:
- Originator name/address/account number
- Originator’s depository institution name
- Payment amount
- Receiver name/address/account number
- Receiver’s financial institution
What do the OFAC regulations require FIs to do in relation to receiving payments?
Financial institutions are expected to Block accounts and other property of specified countries, entities, and individuals.
Financial institutions are to Prohibit or reject financial transactions with specified countries, entities, and individuals.
Under what circumstances must financial institutions block OFAC transactions?
- Are by or on behalf of a blocked individual or entity;
- Are to or go through a blocked entity; or
- Are in connection with a transaction in which a blocked individual or entity has an interest
What is the time frame to report a blocking or rejection of prohibited transactions and how long to keep those records?
financial institutions must report all blockings to OFAC within 10 business days of the occurrence and annually by September 30 concerning those assets blocked.
Prohibited transactions that are rejected must also be reported to OFAC within 10 business days of the occurrence.
Financial institutions must keep full and accurate records of each rejected transaction for at least five years after the date of the transaction.
What are the main areas of the OFAC Compliance Program?
The program should:
- Identify higher-risk areas
- Provide for appropriate internal controls for screening and reporting
- Establish independent testing for compliance
- Based on the size of your financial institution, designate an employee (or employees) to be responsible for OFAC compliance
- Create training programs for appropriate personnel in all relevant areas of the financial institution
What are the critical items to have in an OFAC policy?
- Identify who in the organization is responsible for OFAC compliance
- Specify how the organization maintains an up-to-date listing of prohibited countries, organizations, and individuals
- Distinguish how specific transactions are handled if they are debits or credits
- Specify what information is checked against the SDN list or any other lists that are used
- Define how to handle OFAC review of on-us transactions
- Outline how to comply with OFAC reporting procedures
- Document record retention requirements
- Last OFAC compliance audit
What are the possible values of the OFAC Screening Indicator?
A value of “0” indicates the party conducting the review has not found a potential blocked party, as identified by OFAC on its list of
Specially Designated Nationals (“SDN list”).
A value of “1” indicates the potential presence of a potential blocked party.
What is a Gateway
A Gateway can be either an ACH Operator or a Participating Depository Financial Institution, that acts as an entry point to or exit point from the United States for ACH payment transactions.
What is the deadline to return an exception check (not properly payable)
Midnight following the day of presentment
Who are the two ACH Operators?
The Clearing House
Federal Reserve (Fed ACH)
The timeframe that an originator that received a return of R11-entry not in accordance with terms, has to correct the error without the need for re-authorization
The originator must transmit a new entry within 60 days after the settlement date of the return entry
If one of the following entries is returned as R11-entry not in accordance with terms the originator ______
The originator did not provide required notice to the consumer for an ARC, BOC or POP entry prior to accepting the check
A source document of an ARC BOC or POP entry was ineligible
A Reversing Entry was improperly initiated
The Originator cannot transmit a correcting ACH Entry.
The timeframe the ODFI has to refuse an ACK or ATX entry, and make it available to the originating ACH Operator
15 Days of receipt
An originator must submit Return Fee entries as a separate batch with what Entry Description Code?
RETURN FEE
For purposes of the ODFI’s registration of a TPS with NACHA, a TPS must provide the requested information to the ODFI within ____ days from receipt of the request
2 Banking Days
Upon receipt of a written request by NACHA, Regarding an Originator or TPS Return Rate Threshold, an ODFI must provide what 5 pieces of information?
- Legal Name, DBAs, TIN of the Originator or TPS
- A statement if the Originator or TPS acts as a direct sending point
- Origination Volume for the period of time specified by NACHA
- The return rate, by SEC code
- A statement contesting NACHAs claim, or with the reason that caused the excess in returns
Timeframe by which an ODFI must respond to receipt of a written request by NACHA, Regarding an Originator or TPS Return Rate Threshold
10 Banking Days
When an Originator or TPS has exceeded their Unauthorized Return Threshold the ODFI must provide the following 6 items within 10 Banking Days
- A detailed plan and timeline to reduce the return rate, by the 30th day after the receipt of written request
- Address, Phone Number, Contact Person of the Originator/TPS
- Description of Nature of Business, and the
- methods used to obtain proper authorizations
- Length of ACH relationship
Date of most recent review of exposure limits - Date of ODFI’s most recent completed ACH Audit
When an Originator or TPS has exceeded their Administrative Return Threshold the ODFI must provide the following within 10 Banking Days (5)
- A detailed plan and timeline to reduce the return rate, by the 30th day after the receipt of written request
- Address, Phone Number, Contact Person of the Originator/TPS
- Length of ACH relationship
- Date of most recent review of exposure limits
- Date of ODFI’s most recent completed ACH Audit
An ODFI must register a TPS and Nested TPS with Nacha and provide what information
*ODFI Name
* Name, Title, Telephone number, email address and street address of the contact person at the ODFI
*Name of the TPS and city and state
*Company ID(s)
*If they have nested TPS
Timeframe by which an ODFI must register a TPS or Nested TPS with Nacha
Within 30 days from the first originated entry, or
10 days from learning of a TPS or Nested TPS
an ODFI with no TPS or Nested TPS must provide the following infromation to Nacha
- ODFI Name
- Name, Title, Telephone number, email address and street address of the contact person at the ODFI
- A statement acknowledging that the the ODFI has not TPS’
General information that an RDFI must provide to a consumer reciever regarding a received entry (9)
- Posting Date
- Dollar Amount
- Company Entry Description
- Originator Name
- amount of fees charged due to the entry
- Account Type
- Account Number
- Account balance at the beginning and end of statement period
- Address/Phone number for inquiries
For ARC, BOC, RCK and XCK what additional infromation must an RDFI provide to a conumer reciever regarding a receieved entry?
The check serial number
For MTE, POS, SHR what additional infromation must an RDFI provide to a conumer reciever regarding a receieved entry?
- Terminal ID Code and/or location
- Terminal city, and
- Terminal state
For a POP entry what additional infromation must an RDFI provide to a conumer reciever regarding a receieved entry?
- Check serial number
- Terminal City
- Terminal State
By when must an RDFI provide non-consumer addenda record, upon request from the reciever (for non Healthcare EFT entries)
Second Banking Day, following settlement date
For a Health Care EFT, and RDFI must..
- Either automatically or upon request of the health care provider, make available the addenda payment related information by the Second Banking Day, following settlement date
- Offer or make available to the health care provider, the ability to access the payment related information (addenda record) electronically.
For an entry subject to UCC Article 4A, the RDFI must notify the reciever that
- The entry may be transmitted throught ACH
- Laws governing the payment will be for the State of NY, unless another state is identified in agreement
- The RDFI does not need to notify the reciever of each entry as they are received
- Credit given is provisional, until settlement has occured.
- If settlement does not occur, the RDFI has the right to reverse the entry, and the originator will not be considered to have paid the amount
A non-consumer reciever of a credit entry must update its resords to reflect the Originator’s payments as having been received as of a date that is no later than _____
The settlement date
What is the timing of debit entires for:
1. RDFI posting to the Reciever
2. ODFI processing to the ACH Operator
- a debit needs to be posted on settlement date - cannot be posted prior to
- an ODFI can release debit entries warehoused to the ACH Operator within 1 day prior to the effective date
A consumer stop payment order will stay in effect until the earlier of .. (2)
- The whidrawal of the stop payment by the reciver
- The return of the debit entry, or if the stop is recurring, where all such debit entries have been returned
A non-consumer stop payment order will stay in effect until the earlier of .. (3)
- The whidrawal of the stop payment by the reciver
- The return of the debit entry
- six months from the date of the stop payment order
Timing for an RCK return
by midnight of the second business day following the day the entry was received
Time an RDFI has to send a correction for a dishonored return
2 Banking Days
Reasons an RDFI may contest a dishonored return (6)
- the original return was timely
- the original return was not a duplicate
- the original return did not contain errors
- the dishonbored return was misrouted or untimely
- the dishonored return related to an erroneous entry that was already returned
- Funds relating to an R62 (-return of erroneous or reversing debit) are not recoverable from the reciever
Time by which a COR entry has to be transmitted
2 banking days from settlement
a debit entry was not authorized by the receiver if (4)
- authorization requirements were not met
- ARC/BOC - the signature is not authorized
- POP - the signtaure received on the authorizations is not vaild
- Reciever revoked authorization
a Debit entry is not “in accordance with the terms of the authorization” if.. (7)
- Different amount than what was authorized
- Settlement occurred earlier than authorized
- ARC, BOC, POP entry was imporperly originated
- Entry is part of an incomplete transaction
- Entry was improperly re-initiated
- Reversing entry was improperly reinitiated
- Entry was not affirmative initiated by the receiver in terms with a standing authorization
The time an RDFI has to provide an ODFI with a copy of a WSUD
10 Banking Days
The time an ODFI has to request a copy of a WSUD from the RDFI
One year from the settlement date of the extended return entry
Formatting specifications for Alphameric characters in an ACH File
Left Justified, space filled
Formatting specifications for Numberic characters in an ACH File
Right Justified, zero filled, unsigned
When formatting a file, what fields are required to be uppercase (6)
- Standard Entry Class Code
- File ID Modifier
- Change codes for COR
- Retun Reason Codes
- Mandatory-Preassigned Company Entry Descriptions
- Company Name field in an XCK entry (CHECK DESTROYED)
Same day ACH Entry Max
$1,000,000.00
