Certified Regulatory Compliance Manager (CRCM) — Question 158

A sender and any prior collecting banks grant a security interest to the sender's administrative Reserve Bank in all of their respective assets in the possession of the Reserve Bank to secure any of their obligations to the Reserve Bank. This security interest attaches when any warranty is breached or any obligation to the
Reserve Bank is incurred. The Reserve Bank may take any action under applicable law to enforce its security interest; including exercising its right to set off amounts against any funds it holds. This situation holds true when:

Answer options

• A. Item is sent to a Reserve Bank
• B. Reserve Bank recovers
• C. Bank makes for a substitute check
• D. Sender identifies liability to Reserve Bank

Correct answer: A

Explanation

The correct answer is A because the security interest is established when the item is sent to the Reserve Bank. Options B, C, and D do not accurately describe the conditions under which the security interest attaches as outlined in the original question.