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Compliance and Audit Flashcards

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  1. Excessive administrative return rates (R02, R03, R04) for an Originator may indicate:

    Answer: Data quality problems or potential fraud in the Originator's account database

    High administrative return rates suggest the Originator's account database is inaccurate or outdated, which may also be a fraud indicator requiring ODFI investigation.

  2. Under Regulation E, a financial institution's error resolution process must be completed within:

    Answer: 10 business days (or 45 calendar days if provisional credit is extended to the consumer)

    Regulation E requires institutions to investigate and resolve error claims within 10 business days, or up to 45 calendar days if they provisionally credit the disputed amount while investigating.

  3. When must an ODFI suspend an Originator's ACH origination privileges?

    Answer: When the ODFI determines the Originator has materially breached the origination agreement or NACHA rules

    An ODFI must suspend an Originator that has materially breached the ACH origination agreement or the NACHA Operating Rules to protect the network and limit the ODFI's liability.

  4. Same-Day ACH rules require ODFIs to submit same-day entries to the ACH Operator by:

    Answer: Specific same-day processing windows (e.g., 10:30 AM ET and 2:45 PM ET)

    Same-Day ACH has defined submission windows (such as 10:30 AM ET and 2:45 PM ET) that ODFIs must meet for entries to receive same-day settlement.

  5. The administrative return rate threshold (R02, R03, R04) that triggers NACHA review of an Originator is:

    Answer: 3% of ACH debit entries originated

    An administrative return rate exceeding 3% triggers NACHA review, indicating the Originator's account database has significant data quality issues.

  6. Under NACHA rules, a Third-Party Sender's compliance obligation includes:

    Answer: Entering into a written agreement with the ODFI acknowledging its responsibilities under NACHA Operating Rules

    NACHA requires each Third-Party Sender to have a written agreement with its sponsoring ODFI that explicitly acknowledges the TPS's obligations to comply with NACHA Operating Rules.