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NCP Questions with Answers (100% Correct
Answers)
According to the ECCHO Rules, what items are eligible for image exchange?—
Answer: ECCHO Rules, Section XIX (C) outlines image eligibility as follows:
Item is defined as a "check" under § 229.2(k) of Regulation CC;
Item is a Fully Qualified Item; and
Sending Bank and the Receiving Bank have entered into an agreement and the
item is eligible for imaging under that agreement.
What provisions are included in the predominant image exchange rules to
address the exchange of images of savings bonds?— Answer: Federal Reserve
OC3: Requirements associated with bonds deposited electronically
• FRB makes no warranties with respect to savings bonds processed
• Must have a completed agreement on file
o New agreement required for separately sorted ICL deposits; No new
agreement needed for savings bonds included in a mixed ICL
• Files must conform to ANSI X9.37-2003 and UCD requirements
• Savings bonds can be deposited in forward cash letters only
o No Return cash letter types will be supported
• MICR line requirements:
o With preprinted MICR line: Must contain full MICR line in Type 25 item
detail record
o Without preprinted MICR line: Only routing number for savings bonds and
the redemption amount in Type 25 item detail record are required
,2
• Physical endorsements are not required
o Electronic endorsements in Type 26 or Type 28 records required, consistent
with check image deposit guidelines
• Physical amount encoding is not required
• Pricing Error Adjustment (PEA)
o FRB provides immediate credit, subject to payment and adjustment
o PEA adjustment result of BPD identification of difference between
redemption amount it calculates and amount it was charged for the bond
ECCHO Rules:
• Provides agreement to transmit images of savings bonds between Members
with exclusions
o Bonds do not meet requirements for image eligibility under Rules
• Rule establishes general standard of care applicable to handling Savings Bond
similar to typical correspondent bank arrangements
• Comingling of images of savings bonds and checks allowed
• Industry Formats and Standards for Data File:
o Must follow specifications set forth in Fed Quick Reference Guide
• Bank may reject and return image of Bond for any reason prior to payment by
Fed
• Payment subject to correction and adjustment from Treasury or Federal
Reserve Bank (as fiscal agent to US Treasur
,3
What Rules and/or Regulations provide oversight for checks converted to
ACH?— Answer: It depends on the Standard Entry Class code (SEC code), but
will generally be the NACHA rules which provide the legal framework for
moving transactions through the ACH system. The NACHA operating rules
and guidelines include provisions for:
Responsibilities, liabilities, and warranties of participants
Availability of funds for converted check transactions
Return timeframes for converted check transactions
Regulation E (Reg E) - Provides protection for consumers whose accounts are
debited or credited via ACH:
Initiated through an electronic terminal or telephone
For the purpose of ordering, instructing, or authorizing a financial institution to
debit or credit an account
An example - each of the following check conversion SEC codes, when
initiated as paper checks then converted to ACH entries for payment and
clearing, are no longer bound by the laws governing check payments:
Accounts Receivable Entry (ARC)
Point-of-Purchase Entry (POP)
Back Office Conversion Entry (BOC)
When converting a check to an ARC, POP, or BOC transaction, what are the
authorization requirements?— Answer: Authorization Requirements:
ARC: Notice must be provided to Receiver
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POP: Authorization must be on the receipt signed at time of purchase
BOC: Signage & written notice at time of payment
• Example: At the check-out or where check is presented as "source document"
to the Originator
How does Regulation CC define a "check"?— Answer: Regulation CC § 229.2
(k) defines a check as -
A negotiable demand draft drawn on or payable through or at an office of a
bank;
A negotiable demand draft drawn on a Federal Reserve Bank or a Federal
Home Loan Bank;
A negotiable demand draft drawn on the Treasury of the United States;
A demand draft drawn on a state government or unit of general local
government that is not payable through or at a bank;
A United States Postal Service (USPS) money order; OR
A traveler's check drawn on or payable through or at a bank
AND is -
Payable in U.S. funds
• Either an original or substitute check
What types of items must be given "next-day availability"?— Answer:
Regulation CC §229.10 states when deposits of various types must be made
available to a bank's customers, measured in business days following the
banking day on which the deposit is made:
NCP Questions with Answers (100% Correct
Answers)
According to the ECCHO Rules, what items are eligible for image exchange?—
Answer: ECCHO Rules, Section XIX (C) outlines image eligibility as follows:
Item is defined as a "check" under § 229.2(k) of Regulation CC;
Item is a Fully Qualified Item; and
Sending Bank and the Receiving Bank have entered into an agreement and the
item is eligible for imaging under that agreement.
What provisions are included in the predominant image exchange rules to
address the exchange of images of savings bonds?— Answer: Federal Reserve
OC3: Requirements associated with bonds deposited electronically
• FRB makes no warranties with respect to savings bonds processed
• Must have a completed agreement on file
o New agreement required for separately sorted ICL deposits; No new
agreement needed for savings bonds included in a mixed ICL
• Files must conform to ANSI X9.37-2003 and UCD requirements
• Savings bonds can be deposited in forward cash letters only
o No Return cash letter types will be supported
• MICR line requirements:
o With preprinted MICR line: Must contain full MICR line in Type 25 item
detail record
o Without preprinted MICR line: Only routing number for savings bonds and
the redemption amount in Type 25 item detail record are required
,2
• Physical endorsements are not required
o Electronic endorsements in Type 26 or Type 28 records required, consistent
with check image deposit guidelines
• Physical amount encoding is not required
• Pricing Error Adjustment (PEA)
o FRB provides immediate credit, subject to payment and adjustment
o PEA adjustment result of BPD identification of difference between
redemption amount it calculates and amount it was charged for the bond
ECCHO Rules:
• Provides agreement to transmit images of savings bonds between Members
with exclusions
o Bonds do not meet requirements for image eligibility under Rules
• Rule establishes general standard of care applicable to handling Savings Bond
similar to typical correspondent bank arrangements
• Comingling of images of savings bonds and checks allowed
• Industry Formats and Standards for Data File:
o Must follow specifications set forth in Fed Quick Reference Guide
• Bank may reject and return image of Bond for any reason prior to payment by
Fed
• Payment subject to correction and adjustment from Treasury or Federal
Reserve Bank (as fiscal agent to US Treasur
,3
What Rules and/or Regulations provide oversight for checks converted to
ACH?— Answer: It depends on the Standard Entry Class code (SEC code), but
will generally be the NACHA rules which provide the legal framework for
moving transactions through the ACH system. The NACHA operating rules
and guidelines include provisions for:
Responsibilities, liabilities, and warranties of participants
Availability of funds for converted check transactions
Return timeframes for converted check transactions
Regulation E (Reg E) - Provides protection for consumers whose accounts are
debited or credited via ACH:
Initiated through an electronic terminal or telephone
For the purpose of ordering, instructing, or authorizing a financial institution to
debit or credit an account
An example - each of the following check conversion SEC codes, when
initiated as paper checks then converted to ACH entries for payment and
clearing, are no longer bound by the laws governing check payments:
Accounts Receivable Entry (ARC)
Point-of-Purchase Entry (POP)
Back Office Conversion Entry (BOC)
When converting a check to an ARC, POP, or BOC transaction, what are the
authorization requirements?— Answer: Authorization Requirements:
ARC: Notice must be provided to Receiver
, 4
POP: Authorization must be on the receipt signed at time of purchase
BOC: Signage & written notice at time of payment
• Example: At the check-out or where check is presented as "source document"
to the Originator
How does Regulation CC define a "check"?— Answer: Regulation CC § 229.2
(k) defines a check as -
A negotiable demand draft drawn on or payable through or at an office of a
bank;
A negotiable demand draft drawn on a Federal Reserve Bank or a Federal
Home Loan Bank;
A negotiable demand draft drawn on the Treasury of the United States;
A demand draft drawn on a state government or unit of general local
government that is not payable through or at a bank;
A United States Postal Service (USPS) money order; OR
A traveler's check drawn on or payable through or at a bank
AND is -
Payable in U.S. funds
• Either an original or substitute check
What types of items must be given "next-day availability"?— Answer:
Regulation CC §229.10 states when deposits of various types must be made
available to a bank's customers, measured in business days following the
banking day on which the deposit is made:
