Topics of Note from AAP Handbook Rules, Regs & Risk

Question 1

An ACH network agreement strives to:

Answer 1

o Define the parameters of the relationship between the two parties
o Identify processing requirements for the specific application
o Establish liability and accountability for procedures related to certain applications

Question 2

Relationships between the consumer as a receiver and the RDFI are governed by:

Answer 2

o Reg E
o The NACHA Operating Rules
o The deposit agreement

Question 3

Participating ACH DFI’s, TPSP’s and TPS’s must retain proof of the completion of the annual audit of compliance and documentation supporting completion must be retained for __________ from the date of the audit.

Answer 3

six years

Question 4

The enforcement mechanism for the ACH Network

Answer 4

The National System of Fines

Question 5

Outlines the rules enforcement procedures to the be applied in the event of a rules violation

Answer 5

Appendix Nine of the NACHA Operating Rules

Question 6

Details ACH arbitration procedures

Answer 6

Appendix Eight of the NACHA Operating Rules

Question 7

Established the basic rights, liabilities and responsibilities of consumers who used EFT transfer and the FI’s that offer it

Answer 7

Electronic Funds Transfer Act of 1978

Question 8

The Electronic Funds Transfer Act applies only to:

Answer 8

Consumer pymts (It does not apply to corporate EFT.)

Question 9

Reg E requires that statements be sent _________for all accts that have ACH activity. If no ACH activity is present, statements can be sent ______________.

Answer 9

monthly, quarterly

Question 10

Reg E covers ACH point of sale transactions (debit cards), but error resolution is handled by ____________

Answer 10

a card issuer and consumer (I.E. PSCU, not LFCU)

Question 11

Customer must be given a _________________ if POS unauthorized transaction claim investigation is not completed

Answer 11

provisional credit

Question 12

An FI may take up to ______________ to complete a POS investigation

Answer 12

45 days

Question 13

An electronic transfer of money from a US consumer to a person or business in a foreign country

Answer 13

remittance transfer

Question 14

The _________________ falls under Reg E Subpart B and is intended to protect consumers who send money electronically to foreign countries

Answer 14

Remittance Transfer Rule

Question 15

A “person” (entity) that provides remittance transfers for consumers in the normal course of business. (ex credit unions, money transmitters, brokers)

Answer 15

Remittance transfer provider

Question 16

remittance transfer rules do not apply to companies that consistently provide ___________ remittance transfers each year and they are not considered a remittance transfer provider.

Answer 16

500 or fewer

Question 17

A consumer has ____________ to cancel a remittance transfer and refunds must be made in full within _______________.

Answer 17

30 minutes, three days

Question 18

Sender has _______________ to report a remittance transfer error and remittance transfer provider has to resolve within _____________

Answer 18

180 days, 90 days

Question 19

A remittance transfer correction must occur within _______________ when resolution is found

Answer 19

one business day

Question 20

Report of results of a remittance transfer investigation must be done within ________________ after completing investigation.

Answer 20

three business days

Question 21

remittance transfer record retention is ________________

Answer 21

two years

Question 22

The structure of UCC 4A reflects certain consistent policies that recognize particular characteristics of wholesale funds transfers including:

Answer 22

o The higher dollar amount of wholesale credit transfers (high risk)
o The speed at which transfers are affected
o The cost affecting wholesale credit transfers
o The sophistication of the parties to wholesale credit transfers

Question 23

The Rights and obligations under Article 4A are based on acceptance of a _________ to which the ___________ is addressed

Answer 23

payment order

Question 24

These items are NOT covered by UCC4A:

Answer 24

Checks or other debit transfers, including ACH debit

Question 25

Some provisions of UCC4A ______________ be altered by agreement

Answer 25

cannot

Question 26

Provisions that can be altered by UCC4A may be overruled by provisions of _____________________________

Answer 26

the NACHA Operating Rules

Question 27

Under UCC4A, an ___________ is generally not liable to an ODFI for an unauthorized entry allegedly transmitted to the ODFI by the _________________ unless an agreement is made that a commercially reasonable level of security is agreed upon by the originator and that is altered

Answer 27

originator

Question 28

________________’s critical BSA function is the collection, maintenance and analysis of date on suspicious transactions through suspicious activity reports (SARs).

Answer 28

FinCIN

Question 29

In 2021, the FRB adopted the ________________ “ample reserves” framework

Answer 29

Federal Open Market Committee’s (FOMC)

Question 30

The Federal Reserve has reduced reserve requirements ratios to __________________.

Answer 30

zero percent

Question 31

Allows depository institutions to suspend enforcement of transfer limits, although it is not required.

Answer 31

“ample reserves” framework

Question 32

NACHA operating rules reflect the _________________ principal, and more importantly ____________________ principal

Answer 32

Know your Customer (KYC), Know your Customer’s Customer (KYCC)

Question 33

Requires FI’s to have a Customer Identification Program (CIP)

Answer 33

USA Patriot Act

Question 34

The foundation for controlling ACH credit risk is accomplished by:

Answer 34

establishing a credit monitoring system by which corporate customers can be evaluated.

Question 35

Participants in the ACH payment system can reduce fraud risk in two ways:

Answer 35

o Reduce the chance that fraudulent activities could take place in the organization
o Increase the likelihood that any attempted fraud will be detected promptly

Question 36

Establishing ____________________ can be an effective tool for monitoring and controlling risk.

Answer 36

an ACH operational control group

Question 37

The goal of a __________________ is the resume business as quickly and fully as possible.

Answer 37

disaster recovery plan

Question 38

A vital part of any risk control program should be:

Answer 38

contingency plans designed to handle exception conditions.

Question 39

The most important aspect of consistent ACH pymt processing is the effect delays have on:

Answer 39

o Customer relations
o Credibility of the involved financial institutions and the originator
o Other legal obligations

Question 39

NACHA supports data security policies that include:

Answer 39

o A commitment to use the ANSI ASC X9 Standard for authentication
o Key management
o Encryption for maximum confidentiality