2017 National ACH Association Rules

Transcription

1 2017 National ACH Association Rules Michael Lopes & Michelle Balboni Senior Internal Auditors MEMBER OF ALLINIAL GLOBAL, AN ASSOCIATION OF LEGALLY INDEPENDENT FIRMS 2017 Wolf & Company, P.C.

2 Before we get started Today s presentation slides can be downloaded at The session will last about 45 minutes, and we ll then have time for Q & A. Our audience will be muted during the session. Please send your questions in using the Questions Box located on the webinar s control panel. 2

3 About Wolf & Company, P.C. Established in 1911 Offers Audit, Tax, and Risk Management services Offices located in: Boston, Massachusetts Springfield, Massachusetts Albany, NY Livingston, NJ Over 200 professionals As a leading regional firm founded in 1911, we provide our clients with specialized industry expertise and responsive service.

4 Financial Institution Expertise Over 45 Risk Management Professionals: IT Assurance Services Group Internal Audit Services Group Regulatory Compliance Services Group WolfPAC Solutions Group Provide services to over 300 financial institutions: Approximately 85 FIs with assets > $1B Approximately 40 publicly traded FIs Constant regulatory review of our deliverables Provide Risk Management Services in 27 states and 2 U.S. territories 4

5 Meet Today s Presenters Michael Lopes Senior Internal Auditor Phone: mlopes@wolfandco.com Michelle Balboni Senior Internal Auditor Phone: mbalboni@wolfandco.com

6 Today s Agenda 2016 Rule Changes Overview September 23, 2016 October 3, 2016 August 18, Rule Changes September 15, 2017 September 29, Rule Changes March 16,

7 ACH Flow Chart Image provide by occ.gov 7

8 2016 ACH Rule Changes September 23, 2016 October 3, 2016 August 18,

9 Surveyed Banks on ACH Origination Volume 9

10 Changes: September 23, 2016 Same Day ACH The new ACH Network Functionality will be implemented in three different phases: Currently credits only Debits on the way Two Fed processing deadlines each day, one at 10:30 AM and the other at 2:45 PM Eastern Time. Two settlement times, 1PM and 5PM Eastern Time Funds Availability: Funds must be available at the end of your processing day. Phase 3 requirements which go into effect March 16, 2018 is 5PM RDFI local time. 10

11 Changes: September 23, 2016 Same Day ACH Entry Fee NACHA Fees: 5.2 cents per Same Day transaction originated Fed Fees: Returns will not incur this fee. 0.1 cents per Same Day transaction Flat $10 fee per month if you originate 11

12 Changes: October 3, 2016 Improving Network ACH Quality Defines and Establishes a Methodology Methodology for Setting Fees Collection of Fees Effective Date 12

13 Approved on August (Effective Immediately) Standard Entry Description; RCK; and Returns for R03/R04 Rules Enforcement Monitoring Class 2 Violations Protection of the National Association from Liability for Enforcement of the Rules Rules Enforcement - Appeal Process for Suspension from the Network IAT Entries - ODFI Identification 13

14 2017 ACH Rule Changes September 15, 2017 September 29,

15 What's on its way for 2017? Same Day ACH Phase 2 With Phase 2 implementation, the addition of debits expands eligibility further Same Day ACH debits will support use cases such as bill payment, account-to-account transfers, check conversion, business-to-business, and e-commerce payments Prenotifications for future debit Entries and Reversals of credits will be eligible for same-day processing Effective date: September 15,

16 Potential Issues Potential Issues with Same Day ACH Phase 2 Problems: Early posting of debits Consequences: NACHA rule violation Overdrawing accounts Inappropriate fees Angry customers CFPB / UDAAP 16

17 Potential Issues Far more SDACH returns How will you process? Throughout the day or end of day? What if a debit overdraws the account in the AM and a Credit is made in the PM? Would you have already returned the AM transaction? Be transparent 17

18 Potential Issues ARC, BOC, and POP transactions Problems: Customer Expectations Most consumers believe a check signed today will hit there account, at a minimum, the next day. Again be transparent 18

19 A Benefit of Same Day Returns Now and during phase 2 you can process same day returns for both credit and debits. You CANNOT return a debit that settles next day SDACH Origination restrictions do not apply for returns. There is no fee for SDACH returns 19

20 TPS Flow Chart No agreement in place between Originator and ODFI, but TPS assumes new obligations through agreement with ODFI and through agreement with Originator and between Third-Party Senders. Image provide by occ.gov 20

21 Third Party Sender Registration Q: Who will this rule apply to? A: Every ODFI will be required to either register its Third-Party Senders, or state that it has no Third-Party Senders. 21

22 Third Party Sender Registration Q: Is this registration model the same as what is already used with Direct Access Registration? A: Yes, in fact, NACHA intends to provide both Direct Access Registration and Third-Party Sender Registration via a single platform because many ODFIs that have neither Direct Access customers or Third- Party Senders could attest to both at one time. 22

23 Third Party Sender Registration Registration Requirements: Initial basic registration information Supplemental Registration Enforcement 23

24 Third Party Sender Registration For ODFIs with Third-Party Sender customers, the ODFI is to provide a limited set of initial, basic registration information: the ODFI s name and contact information; the name and principal business location of the Third-Party Sender; the routing number (Specifically, the ODFI s routing number as included in the Originating DFI Identification field) used in ACH transactions originated for the Third-Party Sender; and the Company Identification(s) of the Third-Party Sender 24

25 Third Party Sender Registration Upon written request from NACHA, an ODFI will be required to provide within 10 Banking Days the following information: any doing-business-as names, taxpayer id number(s), and street and website address(es) of the TPS; the name and contact information for the TPS contact person; names and titles of the TPS principals; the approximate number of Originators for which the TPS transmits entries; and a statement as to whether the TPS transmits debit entries, credit entries or both. 25

26 Third Party Sender Registration Q: What about nested Third-Party Senders (the situation when a Third-Party Sender has a third-party Sender between it and the Originators)? Should they be registered and by whom? A: Third-Party Sender must disclose to the ODFI the identity of any other Third-Party Sender for which it transmits entries to the ODFI, prior to transmitting entries for the other Third-Party Sender. A Third-Party Sender must provide the ODFI, upon the ODFI s request, the information necessary for the ODFI to complete registration, within 2 banking days. 26

27 Third Party Sender Registration The Rule will become effective on September 29, The implementation period will last through March 1,

28 What s Next for 2018? Same Day ACH Phase 3 With Phase 3, RDFIs must make funds available for withdrawal by 5:00 PM RDFI local time Effective Date: March 16, 2018 There is always something else 28

29 Recap Reviewed the following for 2016: Same Day ACH Phase 1 Improving the ACH Network Quality Various other minor rule changes Reviewed the following for 2017: Same Day ACH Phase 2 Third-Party registration requirement 29

30 Additional Resources NACHA ACH Rules Online NEACH Minor Rule Topics FedACH 2017 Fee Schedule NACH Resource Center Third-Party Sender Identification Tool Third-Party Sender Registration 30

31 Questions?