AAP Exam 188 Questions with Verified Answers
What are the primary functions of NACHA? - CORRECT ANSWER manages the
development, administration, and governance of the ACH Network.
Who are the ACH Operators? - CORRECT ANSWER EPN or FRB
What is the function of the ACH Operators? - CORRECT ANSWER central clearing
facility for the clearing, delivery and settlement of entries between and among
participating DFIs.
Which Regulations govern FEDWIRE funds transfer? - CORRECT ANSWER Reg J,
Subpart B, UCC4A, Reg CC, BSA, OFAC, Federal Reserve Policy on Payments
System Risk.
What year routing number policy was adopted by the American Bankers
Association - CORRECT ANSWER 1911
What year did the national standard for imprinting checks with machine-readable
numbers and characters? - CORRECT ANSWER 1956
What rules and regs govern the processing of ACH transactions? - CORRECT
ANSWER NACHA Operating Rules, Title 31 CFR Part 210, UCC4A, Reg E, Reg CC,
Reg D
Do all FI have to originate ACHs to receive them? - CORRECT ANSWER No
Name the participants in a Fedwire transaction - CORRECT ANSWER Originator-
Originating/Sender Bank-Federal Reserve Bank-Beneficiary's DI-Beneficiary
How many addenda records can a CTX have? - CORRECT ANSWER 9,999
Transaction Set 813 - CORRECT ANSWER Tax Returns
Transaction Set 820 - CORRECT ANSWER Payment order/remittance info
,Transaction Set 823 - CORRECT ANSWER Lockbox payments
Transaction Set 828 - CORRECT ANSWER Debit Authorizations
Transaction Set 835 - CORRECT ANSWER Healthcare claim/payment advice
Transaction Set 521 - CORRECT ANSWER Income Asset
Transaction Set 103 - CORRECT ANSWER Abandoned Property
What are the Five types of Risk? - CORRECT ANSWER Credit, Operational, Fraud,
Compliance and Systemic
What type of Risk is hardware failure? - CORRECT ANSWER Operational
What type of Risk is harmful intent? - CORRECT ANSWER Fraud
How often does NACHA require audits or rules compliance? - CORRECT ANSWER
Annually, before December 31st
Direct Access - CORRECT ANSWER An originator, TSPS or TPS transmits credit or
debits entries directly to the an ACH Operator using the ODFIs routing number
and settlement account
Operational Risk - CORRECT ANSWER Risk that the exchange of ACH trnxs will not
be completed accurately or on time because of an operational failure at some
point in the exchange process.
Fraud Risk - CORRECT ANSWER Risk that ACH data will be compromised through
the introduction of false trnxs, or the alteration of static data that controls the
routing or settlement of ACH trnxs.
Compliance Risk - CORRECT ANSWER Risk that involves operating efficiency of the
ACH Network and helps minimize a FIs exposure to risk.
, Credit Risk - CORRECT ANSWER Risk that a party to a payment transaction will be
unable to provide the necessary funds to settlement of payment.
Systemic Risk - CORRECT ANSWER Risk that the inability or unwillingness of one
participant in a clearing and settlement network to settle its commitments will
cause other network participants to be unable to settle their commitments on
that network or on the other networks.
How long must a participating depository FI retain ACH Records? - CORRECT
ANSWER 6 years
How long must an ACH Operator retain records? - CORRECT ANSWER 1 Year
What is the timeframe in which reversals must be initiated? - CORRECT ANSWER
The Entry must be transmitted to the ACH Operator to be made available to the
RDFI within 5 banking days
Which missing field will reject at the ACH Operator Level? - CORRECT ANSWER
Mandatory Field
Which incorrect/incomplete field may cause the RDFI to reject the file? - CORRECT
ANSWER Required Field
Which field will not affect the file? - CORRECT ANSWER Optional Field
Which Reg states that MTE, POS and SHR entries must have the Terminal ID Code
or location, Terminal City and Terminal State? - CORRECT ANSWER Reg E
What is the UCC? - CORRECT ANSWER Intended to simplify, clarify and modernize
the law governing COMMERCIAL trnxs and to make the law uniform under various
jurisdictions.
What is UCC4A? - CORRECT ANSWER This applies to payment orders addressed to
a Bank or to pay money to a beneficiary. It is intended to govern credit transfers,
including those transmitted over CHIPS, Fedwire and the ACH Network. Generally,
this applies to wholesale credit transfers.
What are the primary functions of NACHA? - CORRECT ANSWER manages the
development, administration, and governance of the ACH Network.
Who are the ACH Operators? - CORRECT ANSWER EPN or FRB
What is the function of the ACH Operators? - CORRECT ANSWER central clearing
facility for the clearing, delivery and settlement of entries between and among
participating DFIs.
Which Regulations govern FEDWIRE funds transfer? - CORRECT ANSWER Reg J,
Subpart B, UCC4A, Reg CC, BSA, OFAC, Federal Reserve Policy on Payments
System Risk.
What year routing number policy was adopted by the American Bankers
Association - CORRECT ANSWER 1911
What year did the national standard for imprinting checks with machine-readable
numbers and characters? - CORRECT ANSWER 1956
What rules and regs govern the processing of ACH transactions? - CORRECT
ANSWER NACHA Operating Rules, Title 31 CFR Part 210, UCC4A, Reg E, Reg CC,
Reg D
Do all FI have to originate ACHs to receive them? - CORRECT ANSWER No
Name the participants in a Fedwire transaction - CORRECT ANSWER Originator-
Originating/Sender Bank-Federal Reserve Bank-Beneficiary's DI-Beneficiary
How many addenda records can a CTX have? - CORRECT ANSWER 9,999
Transaction Set 813 - CORRECT ANSWER Tax Returns
Transaction Set 820 - CORRECT ANSWER Payment order/remittance info
,Transaction Set 823 - CORRECT ANSWER Lockbox payments
Transaction Set 828 - CORRECT ANSWER Debit Authorizations
Transaction Set 835 - CORRECT ANSWER Healthcare claim/payment advice
Transaction Set 521 - CORRECT ANSWER Income Asset
Transaction Set 103 - CORRECT ANSWER Abandoned Property
What are the Five types of Risk? - CORRECT ANSWER Credit, Operational, Fraud,
Compliance and Systemic
What type of Risk is hardware failure? - CORRECT ANSWER Operational
What type of Risk is harmful intent? - CORRECT ANSWER Fraud
How often does NACHA require audits or rules compliance? - CORRECT ANSWER
Annually, before December 31st
Direct Access - CORRECT ANSWER An originator, TSPS or TPS transmits credit or
debits entries directly to the an ACH Operator using the ODFIs routing number
and settlement account
Operational Risk - CORRECT ANSWER Risk that the exchange of ACH trnxs will not
be completed accurately or on time because of an operational failure at some
point in the exchange process.
Fraud Risk - CORRECT ANSWER Risk that ACH data will be compromised through
the introduction of false trnxs, or the alteration of static data that controls the
routing or settlement of ACH trnxs.
Compliance Risk - CORRECT ANSWER Risk that involves operating efficiency of the
ACH Network and helps minimize a FIs exposure to risk.
, Credit Risk - CORRECT ANSWER Risk that a party to a payment transaction will be
unable to provide the necessary funds to settlement of payment.
Systemic Risk - CORRECT ANSWER Risk that the inability or unwillingness of one
participant in a clearing and settlement network to settle its commitments will
cause other network participants to be unable to settle their commitments on
that network or on the other networks.
How long must a participating depository FI retain ACH Records? - CORRECT
ANSWER 6 years
How long must an ACH Operator retain records? - CORRECT ANSWER 1 Year
What is the timeframe in which reversals must be initiated? - CORRECT ANSWER
The Entry must be transmitted to the ACH Operator to be made available to the
RDFI within 5 banking days
Which missing field will reject at the ACH Operator Level? - CORRECT ANSWER
Mandatory Field
Which incorrect/incomplete field may cause the RDFI to reject the file? - CORRECT
ANSWER Required Field
Which field will not affect the file? - CORRECT ANSWER Optional Field
Which Reg states that MTE, POS and SHR entries must have the Terminal ID Code
or location, Terminal City and Terminal State? - CORRECT ANSWER Reg E
What is the UCC? - CORRECT ANSWER Intended to simplify, clarify and modernize
the law governing COMMERCIAL trnxs and to make the law uniform under various
jurisdictions.
What is UCC4A? - CORRECT ANSWER This applies to payment orders addressed to
a Bank or to pay money to a beneficiary. It is intended to govern credit transfers,
including those transmitted over CHIPS, Fedwire and the ACH Network. Generally,
this applies to wholesale credit transfers.
