Accredited ACH Professional (AAP) Practice Exam

Which entity acts as a tool to combat fraud risk while controlling systemic risk in the ACH Network?

1. National Credit Union Administration

2. Federal Reserve Bank (FRB)

3. Office of the Comptroller of the Currency

4. Consumer Financial Protection Bureau

The correct answer is: Federal Reserve Bank (FRB)

The Federal Reserve Bank plays a crucial role in the ACH Network by serving multiple functions that help combat fraud risk while also controlling systemic risk. As a central bank, the Federal Reserve is responsible for overseeing the payment systems in the United States, including ACH transactions. One of its primary functions is the implementation and enforcement of rules and standards that govern the ACH process. This includes monitoring transactions for signs of fraudulent activity and ensuring that networks operate smoothly and securely. The Federal Reserve also provides settlement services that help mitigate risks associated with transaction failures, ensuring that funds are transferred safely and quickly. Additionally, the Federal Reserve's regulatory oversight helps to maintain the stability of the financial system as a whole. By creating a framework for managing risks and ensuring that only qualified institutions participate in the ACH Network, it effectively reduces the chances of systemic issues that could arise from widespread fraud or failures of individual institutions. The other entities listed focus on different areas such as consumer protection, credit union regulation, or banking oversight, but they do not specifically serve the dual roles of combating fraud and managing systemic risk within the ACH framework as effectively as the Federal Reserve Bank does.