Deck 57: Banking and Payment Systems

Question 1

Nate, a money launderer, uses prepaid ATM cards exchanged for virtual assets through various game-associated Web sites. From Nate's perspective, holding assets in the virtual world offers an advantage because it

A) can be done anonymously.
B) creates a trail that can be easily traced to an identifiable source.
C) is completely regulated.
D) requires reporting only those transactions that exceed $10,000.

Answer 1

A

Question 2

Limon, a drug trafficker, and Masri, a terrorist, use prepaid ATM cards to move large amounts of cash. From Limon and Masri's perspective, these cards offer an advantage because they

A) can be bought and redeemed anonymously.
B) can move cash a little at a time to avoid reporting requirements.
C) create a paper trail that can be easily traced.
D) link to specific bank accounts.

Answer 2

A

Question 3

In accord with banking industry practices, US Bank's computers are pro?grammed to verify signatures only on checks exceeding $1,000. US Bank cashes a check for $900 on the forged signature of its customer Vita. Under the revised UCC Article 3, with respect to reasonable commercial standards, US Bank is

A) definitely liable.
B) definitely not liable.
C) liable if any other bank verifies all signatures on all checks.
D) liable if Vita has never written or cashed a check for more than $899.

Answer 3

B

Question 4

Like most Europeans, Frank, a resident of Great Britain, pays recurring monthly bills through automatic bank transfers. Compared to the electronic payment systems available in the United States, the European Union's system has led to a shift

A) away from the use of checks.
B) to more diverse methods of payment, but the same number of checks.
C) to less diverse methods of payment, but the same number of checks.
D) towards the use of more checks.

Question 5

State Bank's policy requires that indorsements on checks exactly match the names of the payees. Tovar, an employee of United Company, issues and indorses several payroll checks in the names of former employees and deposits them into her account at State. United files a suit against State to recover the funds. Most likely to suffer the loss is

A) State Bank on the basis of bad faith.
B) Tovar on the ground that she was a fictitious payee.
C) United Company for failing to monitor its employee.
D) the employees in whose names the checks were issued and indorsed.

Question 6

Huey signs a promissory note in reliance on Ian's assurance that it is not a note. Ian negotiates the note to Jinx Collection Agency, which is a holder in due course (HDC) of the note. When Jinx tries to collect, Huey refuses to pay. Under the HDC doctrine, the loss falls on

A) Huey only.
B) Huey and Jinx equally.
C) Huey or Jinx, depending on which party can afford the loss.
D) Jinx only.

Question 7

National Bank's policy is to examine signatures only on checks exceeding $2,500. Checks for lesser amounts are selected randomly for signature verification. National fails to verify a forged drawer's signature on a check for $1,500 drawn on Odel's account. Most likely liable for the amount is

A) National Bank for a failing to exercise due care.
B) National Bank's other customers to whom the loss can be "spread."
C) Odel on the ground that she was a fictitious drawer.
D) the specific National employee who did not verify the signature.

Question 8

Evon, a resident of France, draws a check on Georges Banque payable to Hugo. Compared to the United States, in France this check is effectively

A) negotiable because Hugo can indorse it to any third party.
B) negotiable because Hugo can cash it in any bank.
C) negotiable because it offers better protection from identity theft than an electronic payment system.
D) nonnegotiable.