Critical Nacha Rule Changes

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Episode Summary

In this episode of Wrestling Payments, host Joe Casali talks with Sean Carter, President & CEO at NEACH, about the significant changes in ACH rules. They dive into the recent ballots passed with over 93% approval, focusing on the new risk management framework. This framework aims to protect the payment network from fraud, a challenge all payment systems currently face. Carter emphasizes the collective effort required to combat fraud, highlighting that the changes affect not just one party but all involved in the ACH network.

The conversation then shifts to specific rule changes, particularly the ACH credit monitoring by RDFIs. This new concept asks receiving financial institutions to do more in spotting and preventing fraud, marking a departure from the traditional focus on originators and ODFIs. Examples of past fraud incidents are discussed to illustrate the potential impact of these rules in preventing future fraud. Carter points out the importance of collaboration between RDFIs, ODFIs, and originators to effectively use these rules.

Finally, Carter stresses the urgency of implementing these changes well before the 2026 deadline. He suggests that financial institutions should not wait to adapt, given the serious implications of fraud on society, including funding for trafficking, drugs, and terrorism. The discussion concludes with the importance of keeping information up to date in the NACHA registry and leveraging technology like AI to enhance fraud detection efforts.

Guest-at-a-Glance
Sean Carter
President & CEO
NEACH

Key Insights
A United Front Against ACH Fraud

Sean Carter emphasizes the importance of a collective effort in combating fraud within the ACH network. The new ACH rules, passed with overwhelming approval, reflect this approach by not singling out any one party but rather distributing the responsibility across RDFIs, ODFIs, originators, and third-party senders. This strategy acknowledges that fraud is a complex issue that no single entity can address alone. By mandating contributions from all sides, the aim is to fortify the entire payment system against fraudulent activities, demonstrating a shift towards a more inclusive and collaborative defense mechanism within the financial ecosystem.

Enhanced Role of RDFIs in Monitoring ACH Credits

The episode dives into one of the major changes in the ACH rules: the requirement for RDFIs to monitor ACH credits more closely. This significant shift tasks RDFIs with identifying and addressing potential fraud more proactively. Previously, the focus was predominantly on the originators and ODFIs. By extending this responsibility, the new rules aim to leverage the unique position of RDFIs to spot unusual activities, such as unexpected large deposits, that might indicate fraud. This change underscores a holistic approach to fraud prevention, recognizing that effective detection requires insights from all parties involved in the transaction process.

Immediate Action Required to Combat Fraud

Despite a 2026 deadline for implementing the new ACH rule changes, Sean Carter stresses the importance of starting now. He highlights the critical nature of fraud prevention, not just for the integrity of the payment system but also for societal concerns, as fraud often funds illegal activities. By encouraging financial institutions to adopt new measures promptly, Carter underscores the notion that waiting is not an option when it comes to safeguarding against fraud. This urgency is a call to action for all entities involved in ACH transactions to review and update their processes, utilize new technologies, and ensure compliance with the evolving landscape of fin