Bank Code Bank Code Regulations 1 — Questions and Answers
Question 1: Which organization sets the rules governing ACH transactions and routing number usage in the US?
- Federal Reserve
- NACHA (National Automated Clearing House Association) (Correct answer)
- FDIC
- OCC
Correct answer: NACHA (National Automated Clearing House Association)
NACHA (now operating as Nacha) is the self-regulatory organization that establishes and enforces the rules governing ACH transactions and the use of routing numbers in the US.
Question 2: Under Nacha rules, how long does an Originating Depository Financial Institution (ODFI) have to initiate a reversal of an erroneous ACH entry?
- 1 business day
- 5 banking days (Correct answer)
- 10 banking days
- 30 calendar days
Correct answer: 5 banking days
Under Nacha rules, an ODFI has up to 5 banking days from the settlement date of the original entry to initiate a reversing entry.
Question 3: Which federal regulation governs consumer electronic fund transfers including ACH direct deposit?
- Regulation Z
- Regulation E (Correct answer)
- Regulation D
- Regulation CC
Correct answer: Regulation E
Regulation E, implementing the Electronic Fund Transfer Act (EFTA), governs consumer electronic fund transfers including ACH direct deposits and debit card transactions.
Question 4: What is the Bank Secrecy Act (BSA) requirement related to large wire transfers?
- Banks must report all wire transfers
- Banks must report wire transfers over $10,000 using a CTR (Currency Transaction Report) (Correct answer)
- All wire transfers require FBI approval
- Wire transfers over $1,000 need a court order
Correct answer: Banks must report wire transfers over $10,000 using a CTR (Currency Transaction Report)
Under the Bank Secrecy Act, banks must file a Currency Transaction Report (CTR) for cash transactions over $10,000, including related wire transfers.
Question 5: Under the Dodd-Frank Act, the CFPB has authority to regulate which payment-related activities?
- Only mortgage payments
- Consumer financial products and services including payment systems and electronic transfers (Correct answer)
- Only credit card transactions
- Only business-to-business payments
Correct answer: Consumer financial products and services including payment systems and electronic transfers
The CFPB has broad authority under Dodd-Frank to regulate consumer financial products and services including payment systems, electronic transfers, and remittances.
Question 6: What is 'structuring' in US banking regulations and how does it relate to wire transfers?
- Organizing multiple bank accounts for efficiency
- Breaking up large transactions into smaller amounts to avoid reporting requirements (Correct answer)
- Setting up a wire transfer schedule
- Structuring a loan repayment plan
Correct answer: Breaking up large transactions into smaller amounts to avoid reporting requirements
Structuring (also called 'smurfing') involves deliberately breaking up transactions into smaller amounts to avoid the $10,000 CTR reporting threshold — it is a federal crime.
Bank Code Bank Code Regulations 1
Which organization sets the rules governing ACH transactions and routing number usage in the US?