Certified Regulatory Compliance Manager (CRCM) — Question 167

When returning items to a Reserve Bank, the paying and returning banks:

Answer options

• A. Cannot disclaim the warranties, authorizations, and agreements whether or not the returned check bears an endorsement of the paying bank or returning bank
• B. Authorize the Reserve Bank to handle the item in accordance with Regulation J and the operating circulars
• C. Warrant that the check bears all endorsements applied by all parties that handled the check in paper or electronic form
• D. will not be liable for the failure of a paying bank, collecting bank, or a nonbank payer to pay for an item

Correct answer: A, B, C

Explanation

The correct answer is A, as banks cannot waive warranties and agreements related to returned items. Option B is incorrect because while banks do authorize the Reserve Bank to process items, it does not directly answer the question about disclaiming warranties. Option C is also incorrect, as it implies an endorsement guarantee that is not universally applicable. Option D does not address the warranties and agreements aspect of the question.