NACHA's Enforcement Authority 

NACHA expects all ACH Network participants to generally benefit from any reduction in the number of unauthorized transaction in the ACH Network, as well as the positive reputational impact that could follow. Further, this element of the Rule is not expected to have a material cost impact on ACH Network participants. In fact, in some cases some RDFIs would be relieved of the administrative burden of filing large numbers of alleged Rules violations.

The Rule includes the following changes to the Rules text:

• Appendix Ten, Subpart 10.4.1 (Initiation of a Rules Enforcement Proceeding): modified to allow NACHA to initiate an enforcement proceeding based on a reasonable belief that an authorization violation has occurred, and to use information received from DFIs as part of the proceeding
• Article Ten, Subpart 10.4.3 (Submission Requirements for Rules Enforcement Proceedings Initiated by the National Association): adds NACHA’s reasonable belief that an authorization violation has occurred to the statement submission requirements
• Appendix Ten, Subpart 10.4.6.2 (Responsibilities of Enforcement Panel): Includes a new ACH Rules Enforcement Panel responsibility related to NACHA-initiated enforcement actions

The Rule amends the Rules to allow for increased flexibility in how an initial Rules violation investigation can be initiated. The amendment does not change the Rules enforcement process, but defines additional circumstances under which NACHA may initiate a risk investigation or rules enforcement proceeding based on the origination of unauthorized entries.

In addition, the Rule allows RDFIs to voluntarily provide to NACHA information, such as return data, that may be indicative of a potential Rules violation by other ACH Network participants, including improper authorization practices.

What is NACHA’s new enforcement authority?

• Currently, NACHA can only begin a Rules enforcement proceeding upon a specific claim asserted by an RDFI. The Rule allows for increased flexibility in how an initial Rules violation investigation can be initiated. The amendment does not change the Rules enforcement process, but defines additional circumstances under which NACHA may initiate a risk investigation or Rules enforcement proceeding based on the origination of unauthorized entries.

• In addition, the Rule allows RDFIs to voluntarily provide to NACHA information, such as return data, that may be indicative of a potential Rules violation by other ACH Network participants, including improper authorization practices.

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