Which regulation specifies the obligations of RDFIs and ODFIs in ACH transactions?

Which regulation specifies the obligations of RDFIs and ODFIs in ACH transactions?

• A. OCC 235
• B. Regulation J
• C. Uniform Commercial Code (UCC) Article 4A
• D. Regulation E

Answer: (C)

The correct answer identifies the Uniform Commercial Code (UCC) Article 4A, which specifically outlines the rights and obligations of parties involved in electronic funds transfers, including ACH transactions. This regulation provides a framework for understanding the roles and responsibilities of receiving depository financial institutions (RDFIs) and originating depository financial institutions (ODFIs) in the context of ACH processing. UCC Article 4A addresses key aspects such as the authorization of transactions, liability for errors, and the responsibilities associated with the movement of funds. By establishing these guidelines, it ensures that both RDFIs and ODFIs operate under a consistent legal standard, fostering trust and predictability in the electronic funds transfer system. The other options do not focus specifically on the obligations of RDFIs and ODFIs in ACH transactions. While Regulation E deals with electronic consumer transactions and provides consumer protections, it does not specifically address the operational roles of RDFIs and ODFIs. Regulation J governs the federal reserve's role in the payment system, and OCC 235 relates to specific aspects of payment systems but does not detail the obligations of financial institutions within the ACH framework in the same manner as UCC Article 4A.

The correct answer identifies the Uniform Commercial Code (UCC) Article 4A, which specifically outlines the rights and obligations of parties involved in electronic funds transfers, including ACH transactions. This regulation provides a framework for understanding the roles and responsibilities of receiving depository financial institutions (RDFIs) and originating depository financial institutions (ODFIs) in the context of ACH processing.

UCC Article 4A addresses key aspects such as the authorization of transactions, liability for errors, and the responsibilities associated with the movement of funds. By establishing these guidelines, it ensures that both RDFIs and ODFIs operate under a consistent legal standard, fostering trust and predictability in the electronic funds transfer system.

The other options do not focus specifically on the obligations of RDFIs and ODFIs in ACH transactions. While Regulation E deals with electronic consumer transactions and provides consumer protections, it does not specifically address the operational roles of RDFIs and ODFIs. Regulation J governs the federal reserve's role in the payment system, and OCC 235 relates to specific aspects of payment systems but does not detail the obligations of financial institutions within the ACH framework in the same manner as UCC Article 4A.