What are the expectations for Receiving Depository Financial Institutions for Fraud Monitoring?

Fraud monitoring includes more than OFAC Screening, KYC, and Anti-Money Laundering (AML). If you are performing these and utilizing technology software to identify suspect transactions, this is great – you are on the right path. This can be your foundation for fraud detection activity and will continue to be important. For RDFIs you are expected to monitor for ACH Credits.

Fraud monitoring should consist of reviewing out of norm or anomaly behavior. What is unusual activity to what you are normally seeing in the receipt of ACH entries. Suspect entries may be identified on characteristics of the Entry and the receiving account such as:

• SEC Code does not align with the type of receiving account (CCD entry to a consumer account)
• A high-dollar transaction that is atypical for the receiving account
• Series of similar credit Entries received within a short period of time (multiple payroll or benefit payments)
• Utilize the “PAYROLL” and “PURCHASE” standard Company/Entry Description Field

Any of the above to a:

New Account / Dormant Account / Account acting as a mule

Additional Guidance:

• Behavioral Tolerances and Pattern Recognition
• Name Matching (not a new rule)
• Dollar Tolerances

To investigate the appropriateness of the entry, an RDFI may delay funds availability

Nacha rules provide an exemption to funds availability requirements when the RDFI reasonably suspects fraud.

Communication is key to investigating suspected entries

• Internally with relationship managers

• Between RDFI and Receiver
• Between RDFI and ODFI
• Nacha’s Risk Management Portal and ACH Contact Registry for ODFI contact info to help in its determination

RDFI’s options to return entries:

• R06 - Per ODFI Request, when permission for the return has been granted
• R17 – QUESTIONABLE (Must be returned within two Banking Days)