Almost every financial institution today is classified as a Receiving Depository Financial Institution (RDFI) by allowing your account holders to receive ACH Credit Entries (direct deposit of payroll, Social Security, Railroad Retirement), and ACH Debit Entries (utility payments, insurance premiums, and checks converted into an ACH Debit Entry).
As an RDFI, you should already be aware of the NACHA Operating Rules & Guidelines (ACH Rules) and your rights and responsibilities to comply with Article 3 of the Rules. However, have you wondered if your financial institution is also an Originating Depository Financial Institution (ODFI)?
Your financial institution may not have business or non-consumer account holders and therefore do not offer origination services, however you could be originating for your consumer account holders.
- Do you allow your consumer loan account holders to set up their loan payments to be debited from another financial institution?
- Do you allow your consumer account holders to have their CD interest transferred into another financial institution account?
- Do you send ACH transfers to another financial institution account at the request of your consumer account holder?
If you answered yes to the above questions, your institution is considered an Originating Depository Financial Institution (ODFI) originating on your own behalf. These are a few of the most common requests in today’s banking environment and the most overlooked origination practice with RDFI’s.
As an ODFI, there are also rights and responsibilities as defined within the ACH Rules associated with these types of requests and you could be at risk for non-compliance with these rules.
- Authorization requirements
- Warranties and Liabilities of ODFI
- Exception handling, NOCs and Reinitiation [1] of Returns Entries
- Reversals and requests for Return
EPCOR auditors are Accredited ACH Professionals (AAP’s) with complete and comprehensive knowledge of the NACHA Operating Rules & Guidelines. Let us assist you with your ACH Risk Assessment and/or your required annual ACH Audit by contacting us at audit@epcor.org for more information and schedule your 2015 ACH Audit and/or your ACH Risk Assessment.
[1] Effective September 18, 2015: Refer to Subsection 2.12.4 of the 2015 NACHA Operating Rules & Guidelines.