If a consumer (for personal or household purposes) wants to initiate external transfers to and from another bank in an account in his name, is an ACH Origination Agreement in order? This will be done on a periodic basis with amounts which may range upwards to $10,000 or more. We are concerned about the bank's liability and not knowing if the other account is really in his name or someone else's and the amount of funds being transferred. What other items should we think about?

Yes an agreement is in order. Ours is a modified version of the one we give to business originators. To reduce risk, our system generates prenotes automatically for these external ACH transfers and the customer cannot originate an item for 6 business days to allow time for the prenotes to be returned. To further lessen our risk, on debit originations the customer's account at our bank is credited 3 business days after the debit is sent, to allow time for an item to be returned NSF, acct. closed, etc. This puts the debit risk on the customer instead of us. We have several hundred customers on the system and it works pretty well. The lag between debit settlement and credit settlement initially created some headaches for our accounting folks but they worked thru the issues.

Thanks for the information. That helps. Now, what if the consumer wants to originate to one of his business accounts back and forth from other banks?? I'm having a hard time with this since the accounts are not in like ownership. Should we get get business resolutions showing that ownership and banking authority from the business account? Even though it may be the recipient account at the other bank?

Any agreement to initiate ACH requires an agreement between the bank and the customer, regardless of whether they are a consumer or business. Thorough vetting of the customer, a detailed understanding of the reasons for the transactions be generated and proper credit underwriting of the customer prior to approval is SOP when offering any of these services.

You need to start with the ACH section of the FFIEC IT Examination Handbook and go from there.

We currently allow external transfers thru our online banking system.

The limit is $10,000 daily but we want to lower to $3,000 daily.

Is this a Reg E change in terms? 21 days notice?

When providing this change in terms, can it be a statement message, an email, a banner or click thru on our home banking website or does a paper letter have to be delivered?

Thank you