Question 1

Implemented by _______________, EFTA is intended to provide certain rights to individual consumers using EFT payment systems. It also places responsibilities on financial institutions whose accounts are affected by EFTs.

Accepted Answer

Regulation E (Electronic Fund Transfers) provides certain rights to individual consumers using EFT payment systems and places responsibilities on financial institutions whose accounts are affected by EFTs.

Question 2

Payment to a beneficiary is made at the earlier of the time when:

Accepted Answer

According to the question, the payment to the beneficiary is made at the earlier of the time when the payment order is credited to the beneficiary's account or when notice of the credit is sent to the beneficiary. Hence, option A is the correct answer as it states that payment is made at the earlier of these two events. Option B and C are incorrect as they refer to the receiving bank's account and not the beneficiary's account. Option D is incorrect as it mentions the payment order being debited, whereas the question asks about the payment being credited to the beneficiary's account.

Question 3

Which of the following is/are included in the persons covered under Fedwire transfer coverage?

Accepted Answer

Fedwire transfer coverage includes all parties involved in the transfer process, including Reserve Banks sending or receiving payment orders, senders of payments to a Reserve Bank, and banks receiving payments from a Reserve Bank. Therefore, choices A, B, and C are all included. Choice D is incorrect as it states that none of these are included, which is not true.

Question 4

There is no error in an error in EFT when there is situation as:

Accepted Answer

The answer of There is no error in an error...

Question 5

In Sender's agreement-12 CFR 210.28 it is clearly mentioned that:

Accepted Answer

The answer of In Sender's agreement-12 CFR 210.28 it is...

Question 6

Initial disclosure under Electronic funds transfer act includes:

Accepted Answer

The answer of Initial disclosure under Electronic funds transfer act...

Question 7

It is not required for accounts where the only EFT allowed is a preauthorized transfer to an account. If the account is a passbook account, the bank updates the passbook on presentation; if not, the bank it at least quarterly.

Accepted Answer

A periodic statement is not required for an account where the only EFT allowed is a preauthorized transfer to another account. However, the bank is required to update the passbook on presentation or at least quarterly for non-passbook accounts. Change in terms notice, unauthorized transfers, and error resolution notice are not relevant to this situation.

Question 8

In Receiver's agreement-12 CFR 210.28 it is clearly mentioned that:

Accepted Answer

A) Receiving bank authorizes the Reserve Bank to credit the receiving bank's accountB) An off-line bank warrants to the Reserve Bank that it does not act as an intermediary bank or a beneficiary's bank for payment orders received for a beneficiary that is a bank, unless the off-line bank notifies the Reserve Bank in writing

Question 9

Transfers involving entries to accounts maintained at two different Reserve Banks are:

Accepted Answer

Transfers involving entries to accounts maintained at two different Reserve Banks are referred to as interdistrict transfers. Fedwire transfers only refer to transfers made using the Fedwire system, which can include both intradistrict and interdistrict transfers. Therefore, option B is the best choice as it specifically refers to transfers between Reserve Banks.

Question 10

If the returned check is an electronic item that is not a representation of a ___________, Reserve Banks will indemnify a bank to which the check is returned if the bank incurs losses as a result of indemnities the bank would be required to make under Regulation CC in connection with a substitute check later created from the returned check. A Reserve Bank will not be liable, however, if the loss could be attributed to a lack of good faith or failure to exercise ordinary care on the part of any person who handled the item.

Accepted Answer

The passage mentions "indemnities the bank would be required to make under Regulation CC in connection with a substitute check later created from the returned check." Therefore, the correct term is "substitute check" (B). The other options, "returning check," "cross check," and "returning item" are not mentioned in the passage.

Question 11

The following mentioned points are actually _______________. • Reserve Banks may rely on numbers given in a payment order to identify an intermediary or beneficiary bank • Reserve Banks, when acting as beneficiary's bank, may rely on the number in the payment order that identifies the beneficiary

Accepted Answer

The mentioned points are related to Fedwire transfers which are a real-time gross settlement funds transfer system operated by the US Federal Reserve Bank.

Question 12

An error in EFT includes any of the following:

Accepted Answer

An error in EFT includes all of the options listed above, including an unauthorized EFT, omission of an EFT from a periodic statement, and a consumer's request for documentation or clarification of information.

Question 13

Which of the following primary purpose/s were behind the Electronic Fund Transfer Act (EFTA)?

Accepted Answer

The Electronic Fund Transfer Act (EFTA) was enacted to achieve two purposes, which are to provide disclosures to consumers who use electronic fund transfer (EFT) systems and to provide consumers with limitations on liability for unauthorized electronic fund transfers.

Question 14

__________________ is a transfer that is authorized in advance to occur at substantially regular intervals. Payments that require the consumer to take specific actions to initiate them (such as by entering instructions on a touch-tone telephone or on the Internet) are not such type of EFTs.

Accepted Answer

A preauthorized EFT is a transfer that is authorized in advance to occur at substantially regular intervals.

Question 15

Which of the following is/are NOT limitations on liability in EFT?

Accepted Answer

The answer of Which of the following is/are NOT limitations...

Question 16

A Reserve Bank makes the following warranties when it handles ___________: • For all items, the Reserve Bank warrants that the returned checks bear all endorsements by all parties that previously handled the checks • For all electronic items, the Reserve Bank warrants all of the • Regulation CC warranties as though they were paper checks • For electronic items that are not representations of substitute checks, the Reserve Bank warrants the following to the bank to which it sends the item: (a) The electronic portion of the item accurately represents all of the information on the front and back of the check as of the time the check was truncated (b) All MICR line information is contained on the item (c) The item conforms to the technical standards set forth in the operating circular (d) No person will receive a transfer, presentment, or return, or otherwise be charged for the item such that the person will be asked to make payment based on an item he or she has already paid

Accepted Answer

The warranties given by the Reserve Bank pertain to handling returned checks.

Question 17

Under Unauthorized transfers-12 CFR 205.6 prerequisites for consumer liability are all of the following EXCEPT:

Accepted Answer

The prerequisites listed in 12 CFR 205.6 for consumer liability in cases of unauthorized transfers include the use of an accepted access device, the institution providing a means of identifying the consumer, and providing certain information to the consumer in writing. However, increased liability for the consumer is not a prerequisite, but rather a potential result of the unauthorized transfer.

Question 18

EFT provides consumers with limitations on liability for unauthorized electronic fund transfers. It includes the following types of funds transfers EXCEPT:

Accepted Answer

EFT does not provide limitations on liability for transfers initiated by Fax. The other options mentioned - point-of-sale transfers, ATM transfers and withdrawals of funds - are covered under EFT.

Question 19

Electronic funds transfers' requirements say that transfers that vary in amount must be communicated to the designated payee within _______________ before the scheduled transfer or may give the consumer the option of receiving notice only when a transfer falls outside a specified range of amounts.

Accepted Answer

Electronic funds transfers' requirements state that transfers that vary in amount must be communicated to the designated payee at least 10 days before the scheduled transfer. This gives the consumer enough time to review and confirm the transfer amount before it is made. Therefore, option A is the correct choice.

Question 20

It must provide in writing to consumer at least 21 days before the effective date of any change in a term or condition disclosed in the initial disclosure statement if the change results in: • Increased fees • Increased liability for the consumer • Fewer types of available EFTs • Stricter limitations on frequency or dollar amount of EFTs What is it?

Accepted Answer

This is a requirement for the Change-in-terms notice, as it is mandated by the Electronic Funds Transfer Act (EFTA) to provide consumers with ample time to react to any changes that may negatively affect them. The other options listed (B, C, and D) do not necessarily require a 21-day notice, although they may be subject to other regulatory requirements or timeframes.

Exam 1: Certified Regulatory Compliance Manager