Deposit Operations Flashcards

What does the term 'float' refer to in the context of deposit operations?

Answer: Funds that have been deposited but not yet cleared

Float refers to the period between when a deposit is credited to an account and when the funds actually clear through the banking system.

A 'POD' designation on a deposit account stands for:

Answer: Payable on Death

POD (Payable on Death) designates a beneficiary who receives the account funds upon the account holder's death, bypassing probate.

Which document legally authorizes a third party to transact on a customer's account while the customer is alive?

Answer: A power of attorney

A power of attorney grants a designated agent the legal authority to conduct transactions on behalf of the account owner.

A customer's savings account is classified as 'dormant.' What typically triggers this status?

Answer: No customer-initiated activity for a defined period (e.g., 1–5 years)

Accounts become dormant after a period of inactivity defined by state law, after which unclaimed funds may be escheated to the state.

What is the primary purpose of the Bank Secrecy Act (BSA) as it relates to deposit operations?

Answer: To help detect and prevent money laundering and financial crimes

The BSA requires financial institutions to maintain records and file reports to help detect money laundering, tax evasion, and other financial crimes.

When a CD automatically renews at maturity, the new rate is typically:

Answer: The prevailing rate offered by the bank on that CD term at renewal

At auto-renewal, a CD is repriced at whatever current rate the bank offers for that term, which may be higher or lower than the original.

A customer complains that a check she deposited was returned unpaid. What fee might her bank charge?

Answer: A returned deposited item fee

When a deposited check bounces, the depositor's bank typically charges a returned deposited item fee to cover the reversal cost.