Each Participating DFI must maintain an account with which entity?

Each Participating DFI must maintain an account with which entity?

• A. National Credit Union Administration
• B. Federal Reserve Bank
• C. Office of the Comptroller of the Currency
• D. Federal Deposit Insurance Corporation

Answer: (B)

Each participating Depository Financial Institution (DFI) must maintain an account with the Federal Reserve Bank to facilitate the processing of ACH transactions. The Federal Reserve acts as a central clearing house for ACH payments, which means that it handles the transfer of funds between institutions, ensuring that payments can be processed efficiently and securely. The Federal Reserve Bank provides critical services such as managing the settlement of ACH transactions, holding reserve balances, and helping to ensure liquidity in the banking system. This partnership is essential for the operation of the ACH system, as it allows DFIs to effectively manage their transactions, comply with regulations, and participate fully in the ACH network. The other entities mentioned have different roles that do not pertain to the operational requirements of participating in the ACH network. For instance, the National Credit Union Administration oversees federal credit unions, the Office of the Comptroller of the Currency regulates national banks, and the Federal Deposit Insurance Corporation insures deposits at banks and thrifts. While these agencies play vital roles in the broader financial system, they do not serve as the primary operational accounts for processing ACH transactions.

Each participating Depository Financial Institution (DFI) must maintain an account with the Federal Reserve Bank to facilitate the processing of ACH transactions. The Federal Reserve acts as a central clearing house for ACH payments, which means that it handles the transfer of funds between institutions, ensuring that payments can be processed efficiently and securely.

The Federal Reserve Bank provides critical services such as managing the settlement of ACH transactions, holding reserve balances, and helping to ensure liquidity in the banking system. This partnership is essential for the operation of the ACH system, as it allows DFIs to effectively manage their transactions, comply with regulations, and participate fully in the ACH network.

The other entities mentioned have different roles that do not pertain to the operational requirements of participating in the ACH network. For instance, the National Credit Union Administration oversees federal credit unions, the Office of the Comptroller of the Currency regulates national banks, and the Federal Deposit Insurance Corporation insures deposits at banks and thrifts. While these agencies play vital roles in the broader financial system, they do not serve as the primary operational accounts for processing ACH transactions.