Receiver's Agreement - 12 CFR 210.28

AB

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The correct answer is B: An off-line bank warrants to the Reserve Bank that it does not act as an intermediary bank or a beneficiary's bank for payment orders received for a beneficiary that is a bank, unless the off-line bank notifies the Reserve Bank in writing.

To understand this answer, it's helpful to have some context about what the Receiver's agreement is and what it covers. The Receiver's agreement is a standardized agreement that governs the relationship between a receiving bank (the bank that is receiving a payment order) and the Federal Reserve Banks (the central banks of the United States).

One of the provisions of the Receiver's agreement is section 210.28, which is referenced in the question. This section deals with off-line banks, which are banks that do not have direct electronic access to the Federal Reserve Banks' payment system. Instead, off-line banks typically use a correspondent bank (a bank that does have direct access) to process their payment orders.

The key point of section 210.28 is that an off-line bank must warrant to the Reserve Bank that it does not act as an intermediary bank or a beneficiary's bank for payment orders received for a beneficiary that is a bank, unless the off-line bank notifies the Reserve Bank in writing. In other words, if an off-line bank is processing a payment order that involves a bank as the beneficiary (i.e., the bank that is receiving the funds), it must let the Reserve Bank know if it is also acting as an intermediary bank (a bank that is handling the payment on behalf of another bank) or a beneficiary's bank (a bank that is receiving the payment on behalf of another bank). If the off-line bank fails to notify the Reserve Bank in writing, it is warranting that it is not acting in these capacities.

This provision is important because it helps to ensure that the Federal Reserve Banks have accurate information about the payment flow and the parties involved. If an off-line bank is acting as an intermediary or beneficiary's bank without notifying the Reserve Bank, it could potentially lead to confusion or errors in the payment system.

So, in summary, the correct answer is B because it accurately describes one of the provisions of section 210.28 of the Receiver's agreement, which deals with off-line banks and their obligations to notify the Reserve Bank if they are acting as an intermediary or beneficiary's bank for payment orders involving a bank as the beneficiary.