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Reg CC Flashcards

1
Q

How many subparts are included in Reg cc

A

4
Subpart A,B,C and D

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2
Q

What does Subpart A cover?

A

Authority and purpose
Definitions

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3
Q

What does Subpart B cover?

A
  • funds availability and disclosure requirements
  • joint jurisdiction with consumer financial protection bureau (CFPB)
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4
Q

What does Subpart C cover?

A

Definition of electronic checks/electronic returns checks

Check collection

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5
Q

What does Subpart D cover?

A

Substitute Checks and Consumer awareness (Check 21)

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6
Q

Is Reg CC Federal or State?

A

Federal

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7
Q

What is the reconverting bank?

A

Bank that creates the substitute check (takes electronic image and makes it into a paper check-substitute check)

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8
Q

What is the truncating bank?

A

Bank that removes the original check from the collection process (first bank transfers, presents or returns a substitute check in lieu or original check

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9
Q

What is a depositary bank?

A

First bank to which a check is transferred aka BOFD (bank of first deposit) may also be paying bank

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10
Q

What is a returning bank?

A

Bank handling a returned check or notice (will not be paying to depositary bank

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11
Q

Does Reg CC cover savings accounts?

A

No, Reg CC for checking amounts (DDA account)

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12
Q

What is the term ‘bank’ used to refer to generically?

A

A bank, credit union, savings association, etc. or financial institutions

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13
Q

What is the role of a Collecting Bank?

A

Any bank handling a check for forward collection, except the Paying Bank

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14
Q

What is a Depositary Bank?

A

The first bank to which a check is transferred, also known as Bank of First Deposit (BOFD)

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15
Q

Fill in the blank: A _______ is defined as any bank handling a check for forward collection, except the Paying Bank.

A

Collecting Bank

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16
Q

What does BOFD stand for?

A

Bank of First Deposit

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17
Q

True or False: A Depositary Bank can also be referred to as the Paying Bank.

A

True

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18
Q

What is a Paying Bank?

A

The bank that pays the check upon presentation

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19
Q

What is a checking (deposit) account?

A

A deposit account at a bank from which the account holder makes transfers or withdrawals by negotiable instrument or other similar means to make payments or transfer funds to third persons.

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20
Q

What does ‘availability’ refer to?

A

The time from the day of deposit until funds are available for withdrawal or other use.

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21
Q

Fill in the blank: Funds deposited in a checking account are available for _______.

A

[withdrawal or other use]

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22
Q

True or False: A checking account allows for transfers or withdrawals only through cash transactions.

A

False

Transfers or withdrawals can be made through negotiable instruments or similar means.

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23
Q

What is a common abbreviation for a checking account?

A

DDA

DDA stands for Demand Deposit Account.

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24
Q

What is the significance of the bank’s office hours in relation to a checking account?

A

It indicates when the office of the bank is open to the public for transactions.

This affects when account holders can access their funds or make transactions.

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25
Q

What is a Banking Day?

A

Business day on which office of bank is open to public for substantially all banking functions

This includes services such as deposits, withdrawals, and loan processing.

26
Q

Define Business Day.

A

Calendar day other than a Saturday or a Sunday, or FRB legal holidays

FRB stands for Federal Reserve Bank.

27
Q

Why are banking and business day distinctions important?

A

Consider timing for returns: Number of days from day of presentment for returns are based on banking vs. business day considerations

Understanding these distinctions can affect transaction processing and customer service.

28
Q

Fill in the blank: A _______ is a calendar day other than a Saturday or a Sunday, or FRB legal holidays.

A

Business Day

29
Q

True or False: A Banking Day is the same as a Business Day.

A

False

A Banking Day specifically refers to when the bank is open for operations.

30
Q

What is a check?

A

A document that orders a bank to pay a specific amount of money from a person’s account.

Checks can be used for various transactions, including payments and remittances.

31
Q

What is a negotiable demand draft?

A

A draft drawn on or payable through a bank.

This includes drafts drawn on the Federal Reserve Bank (FRB) or Federal Home Loan Bank (FHLB).

32
Q

What types of drafts are included under demand drafts?

A
  • Drawn on U.S. Treasury
  • Drawn on a state or unit of general local government, not payable through a bank
  • U.S. Postal Service money orders
  • Traveler’s checks
  • An original check and a substitute

These instruments are used for various payment purposes.

33
Q

What is an image cash letter?

A

A standard for transmitting images of checks along with their MICR line data.

It includes images of checks and is used for electronic check processing.

34
Q

True or False: A check can only be issued by a bank.

A

False

Individuals and businesses can also issue checks, but they must be drawn on a bank account.

35
Q

What is a Postal Service money order?

A

A payment instrument issued by the postal service

Used for secure transactions without a bank account.

36
Q

What are the types of checks mentioned?

A

Traveler’s check, original check, substitute check

Different forms of checks used for transactions.

37
Q

What does the term ‘Electronic Check’ refer to?

A

An electronic image and electronic information derived from a paper check

Must conform with X9.100-187 standard.

38
Q

What is required for an item to meet the definition of an Electronic Check?

A

Must have both the image of the item and the MICR line information

MICR stands for Magnetic Ink Character Recognition.

39
Q

What does the term ‘Electronic Returned Check’ imply?

A

An electronic image and information from a paper check that is returned

Sent pursuant to an agreement between sender and Receiving Bank.

40
Q

What are Electronically-Created Items (ECI)?

A

Check-like items created in electronic form that never existed in paper form

These do not meet the definition of an electronic check.

41
Q

True or False: An ECI can create a substitute check.

A

False

ECIs do not meet the definition of electronic checks.

42
Q

Fill in the blank: An electronic check must conform with _______.

A

X9.100-187 standard

This standard outlines the requirements for electronic checks.

43
Q

What does MICR stand for?

A

Magnetic Ink Character Recognition

MICR is used to read and process checks.

44
Q

What types of checks are defined under X9 standards?

A
  • Original check
  • Substitute check
  • Electronic check / Electronic returned check

These standards include X9.100-160, X9.100-140, and X9.100-187 respectively.

45
Q

What is printed near the bottom of a check in magnetic ink?

A

Routing number, account number, check number, check amount, and other information

This information is crucial for the processing of checks.

46
Q

Fill in the blank: The MICR line is printed in _______.

A

magnetic ink

47
Q

True or False: The MICR line must comply with ANS standards.

A

True

Compliance with ANS standards ensures consistency in check processing.

48
Q

What is the purpose of the X9.100-187 standard?

A

For Electrome Check / Electronic Returned Check

This standard is specified for subparts C and D.

49
Q

What is the purpose of X9.100-140 standard

A

For substitute checks

50
Q

What is the purpose for X9-160 (aka X9.13)

A

For original checks

51
Q

What is printed near the bottom of a check?

A

Magnetic ink character recognition (MICR) line

This includes information in accordance with ANSI standards.

52
Q

What ANS standards apply to the original check?

A

X9.100-160 (aka X9.13)

This standard outlines the requirements for original checks.

53
Q

What ANS standard applies to substitute checks?

A

X9.100-140

This standard specifies requirements for substitute checks.

54
Q

What ANS standard applies to electronic checks?

A

X9.100-187

This standard is relevant for electronic checks and electronic returned checks.

55
Q

Is magnetic ink in the MICR line required for all checks?

A

Yes

According to Reg CC, all checks must have routing number in magnetic ink.

56
Q

When is magnetic ink not required for checks?

A

When an IRD is created for a paid item returned as a property paid item

This refers to items returned to the issuing customer’s account.

57
Q

What font is used for MICR characters?

A

E-138 font

MICR characters may also be printed in non-magnetic ink according to section 6.1 of X9.100-140.

58
Q

What must a substitute check conform to?

A

All other requirements of X9.100-140 standard

This ensures the substitute check meets necessary specifications.

59
Q

Does a customer need a copy of an already paid item printed in magnetic ink?

A

No

The Clearing House Payments Company states it does not need to be printed in magnetic ink.

Ncp (13 decks)

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