NCP EXAM WITH 100% CORRECT
ANSWERS
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:
The following types of deposits must be made available on the first business day
following the banking day of deposit ("next-day availability"):
Cash
Electronic payments (under other rules, funds for most electronic deposits are made
available on the day of deposit)
Check deposits made in person -
• U.S. Postal Service Money Orders
• Checks drawn on the Federal Reserve
• State or local government checks
• Cashier's, certified, or teller's checks
• On-us checks
Check deposits made in person or at a proprietary ATM -
• U.S. Treasury checks deposited in an account held by a payee of the check
Under what conditions may a bank delay the availability of funds on deposited checks? -
Answer- Regulation CC §229.13 permits financial institutions to delay the availability of
funds applied to a deposit under certain conditions for a "reasonable period of time",
which is generally outlined as:
On-us checks - one additional business day (total of two business days)
Non on-us checks - five additional business days (total of seven business days)
What is the purpose of Check 21? - Answer- Provides for replacement of paper check
with substitute paper check.
What regulations or rules govern image exchange? - Answer- Agreements between
parties
Draft - Answer- An order to pay
Note - Answer- A promise to pay
,Maker - Answer- A person who signs or is identified in a note as a person undertaking
to pay
Drawer - Answer- A person who signs or is identified in a draft as a person ordering
payment
What disclosures are required by Regulation CC? - Answer- Section 229.15 General
disclosure requirements
• Requires that disclosures set forth under subpart B be written clearly and
conspicuously and in a form that the customer can keep.
Section 229.16 Specific availability-policy disclosure
• Stipulates that a bank must provide disclosure statements describing its policy as to
when funds deposited in an account are available for withdrawal. *
Section 229.17 Initial disclosures
• States banks must disclose their specific availability policies to potential customers
prior to opening a new account.
Section 229.18 Additional disclosure requirements
• Requires banks to make certain disclosures:
o On all preprinted deposit slips provided to customers
o At all locations where bank employees accept consumer deposits
o At automated teller machines (ATMs)
o Upon request
o When any changes are made to their policies
Section 229.57 Consumer awareness (Substitute Check) disclosures
• Requires banks make disclosure statements informing consumers -
o A substitute check is the legal equivalent of an original check
o Recredit rights that apply when a substitute check was not properly charged to an
account
According to Regulation CC, what does it mean to return an item expeditiously? -
Answer- Regulation CC § 229.30 Paying Bank's responsibility for return of checks,
requires the "expeditious" return of checks:
A paying bank returns a check expeditiously if it:
• Returns the check to the depositary bank within two business days of presentment
• Sends the check in the same manner as it (or a similarly situated bank) would have
sent the check for forward collection.
What is a Remotely Created Check? - Answer- Regulation CC § 229.2 (fff) defined a
remotely created check (RCC) as:
Check that is not created by the paying bank and that does not bear a signature
applied, or purported to be applied, by the person on whose account the check is
drawn.
What recourse does a consumer/ Paying Bank have for an unauthorized RCC? -
Answer- Consumer recourse for unauthorized Remotely Created Check (RCC):
, • If identified within the bank's deadline for statement examination and the bank cannot
verify that the customer actually authorized the charge, the customer is entitled to a
refund.
o Valid reason for consumer claims -
Depositor did not authorize the check
o Invalid reasons for consumer claims -
Oral authorization obtained and recorded, the depositor forgot about it
Charge was authorized, depositor is now experiencing "buyer's remorse"
Paying Bank recourse for suspected unauthorized Remotely Created Check (RCC):
• If identified prior to its midnight deadline, may be returned per UCC § 4-301.
• If identified after its midnight deadline has passed:
o May submit a breach of warranty claim per Reg CC § 229.34 that the item is not
authorized -
Bank that transfers or presents a remotely created check and receives a settlement or
other consideration warrants to the transferee bank, any subsequent collecting bank,
and the paying bank that the person on whose account the remotely created check is
drawn authorized the issuance of the check in the amount stated on the check and to
the payee stated on the check.
Within 30 days after the claimant has reason to know of the breach and the identity of
the warranting bank
How does the Uniform Commercial Code define "negotiable instruments"? - Answer-
The Uniform Commercial Code (UCC) Article 3, § 3-104 defines a negotiable instrument
as -
a written promise or order
to pay a specified amount of money, although interest may be added,
to the person named on the instrument, or to the bearer of the instrument,
on demand or at a fixed future time
without the requirement for the person promising payment to perform any act in
addition to paying the money specified
How does the UCC define the issue of an instrument? - Answer- The Uniform
Commercial Code (UCC) Article 3, § 3-105 defines issue of an instrument as the first
delivery of an instrument by the drawer, whether to a holder or nonholder, for the
purpose of giving rights on the instrument to any person.
In the case of an item with differing courtesy and legal amounts, which is correct? -
Answer- The legal amount - amount written in words.
What does it mean to "negotiate" an item? - Answer- Uniform Commercial Code (UCC)
§ 3-201(a) defines negotiation as -
The transfer of possession of an instrument - whether voluntary or involuntary -
• BY a person other than the issuer
ANSWERS
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:
The following types of deposits must be made available on the first business day
following the banking day of deposit ("next-day availability"):
Cash
Electronic payments (under other rules, funds for most electronic deposits are made
available on the day of deposit)
Check deposits made in person -
• U.S. Postal Service Money Orders
• Checks drawn on the Federal Reserve
• State or local government checks
• Cashier's, certified, or teller's checks
• On-us checks
Check deposits made in person or at a proprietary ATM -
• U.S. Treasury checks deposited in an account held by a payee of the check
Under what conditions may a bank delay the availability of funds on deposited checks? -
Answer- Regulation CC §229.13 permits financial institutions to delay the availability of
funds applied to a deposit under certain conditions for a "reasonable period of time",
which is generally outlined as:
On-us checks - one additional business day (total of two business days)
Non on-us checks - five additional business days (total of seven business days)
What is the purpose of Check 21? - Answer- Provides for replacement of paper check
with substitute paper check.
What regulations or rules govern image exchange? - Answer- Agreements between
parties
Draft - Answer- An order to pay
Note - Answer- A promise to pay
,Maker - Answer- A person who signs or is identified in a note as a person undertaking
to pay
Drawer - Answer- A person who signs or is identified in a draft as a person ordering
payment
What disclosures are required by Regulation CC? - Answer- Section 229.15 General
disclosure requirements
• Requires that disclosures set forth under subpart B be written clearly and
conspicuously and in a form that the customer can keep.
Section 229.16 Specific availability-policy disclosure
• Stipulates that a bank must provide disclosure statements describing its policy as to
when funds deposited in an account are available for withdrawal. *
Section 229.17 Initial disclosures
• States banks must disclose their specific availability policies to potential customers
prior to opening a new account.
Section 229.18 Additional disclosure requirements
• Requires banks to make certain disclosures:
o On all preprinted deposit slips provided to customers
o At all locations where bank employees accept consumer deposits
o At automated teller machines (ATMs)
o Upon request
o When any changes are made to their policies
Section 229.57 Consumer awareness (Substitute Check) disclosures
• Requires banks make disclosure statements informing consumers -
o A substitute check is the legal equivalent of an original check
o Recredit rights that apply when a substitute check was not properly charged to an
account
According to Regulation CC, what does it mean to return an item expeditiously? -
Answer- Regulation CC § 229.30 Paying Bank's responsibility for return of checks,
requires the "expeditious" return of checks:
A paying bank returns a check expeditiously if it:
• Returns the check to the depositary bank within two business days of presentment
• Sends the check in the same manner as it (or a similarly situated bank) would have
sent the check for forward collection.
What is a Remotely Created Check? - Answer- Regulation CC § 229.2 (fff) defined a
remotely created check (RCC) as:
Check that is not created by the paying bank and that does not bear a signature
applied, or purported to be applied, by the person on whose account the check is
drawn.
What recourse does a consumer/ Paying Bank have for an unauthorized RCC? -
Answer- Consumer recourse for unauthorized Remotely Created Check (RCC):
, • If identified within the bank's deadline for statement examination and the bank cannot
verify that the customer actually authorized the charge, the customer is entitled to a
refund.
o Valid reason for consumer claims -
Depositor did not authorize the check
o Invalid reasons for consumer claims -
Oral authorization obtained and recorded, the depositor forgot about it
Charge was authorized, depositor is now experiencing "buyer's remorse"
Paying Bank recourse for suspected unauthorized Remotely Created Check (RCC):
• If identified prior to its midnight deadline, may be returned per UCC § 4-301.
• If identified after its midnight deadline has passed:
o May submit a breach of warranty claim per Reg CC § 229.34 that the item is not
authorized -
Bank that transfers or presents a remotely created check and receives a settlement or
other consideration warrants to the transferee bank, any subsequent collecting bank,
and the paying bank that the person on whose account the remotely created check is
drawn authorized the issuance of the check in the amount stated on the check and to
the payee stated on the check.
Within 30 days after the claimant has reason to know of the breach and the identity of
the warranting bank
How does the Uniform Commercial Code define "negotiable instruments"? - Answer-
The Uniform Commercial Code (UCC) Article 3, § 3-104 defines a negotiable instrument
as -
a written promise or order
to pay a specified amount of money, although interest may be added,
to the person named on the instrument, or to the bearer of the instrument,
on demand or at a fixed future time
without the requirement for the person promising payment to perform any act in
addition to paying the money specified
How does the UCC define the issue of an instrument? - Answer- The Uniform
Commercial Code (UCC) Article 3, § 3-105 defines issue of an instrument as the first
delivery of an instrument by the drawer, whether to a holder or nonholder, for the
purpose of giving rights on the instrument to any person.
In the case of an item with differing courtesy and legal amounts, which is correct? -
Answer- The legal amount - amount written in words.
What does it mean to "negotiate" an item? - Answer- Uniform Commercial Code (UCC)
§ 3-201(a) defines negotiation as -
The transfer of possession of an instrument - whether voluntary or involuntary -
• BY a person other than the issuer
