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#205651 - 06/29/04 08:08 PM Calling ACH experts
hawksfan Offline
100 Club
Joined: Mar 2004
Posts: 114
Iowa/Illinois
Company XYZ owns a few telephone companies. They originate ACH files for those companies plus a few other phone companies. Our Bank serves as the ODFI and originates the files provided by XYZ Company on behalf of the individual phone companies. Should we have an origination agreement with XYZ Company or should we have origination agreements with all the individual phone companies or is XYZ Company considered a third party provider and we should have a third party contract with them? Any input is greatly appreciated.

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Audit
#205652 - 06/29/04 08:40 PM Re: Calling ACH experts
MackenzieS Offline
Diamond Poster
MackenzieS
Joined: Jul 2002
Posts: 1,722
Oklahoma
My first thought is that you would only need the origination agreement with XYZ Company. If this is who you return entries to, receive files from, debit their account from, etc...basically if all transactional activity originates soley from XYZ then this is who your agreement should be with. XYZ should have their own agreements with the subsidiary companies.

If ever in doubt, contact your local ACH association.

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#205653 - 06/29/04 09:53 PM Re: Calling ACH experts
hawksfan Offline
100 Club
Joined: Mar 2004
Posts: 114
Iowa/Illinois
Actually, the Bank is sending through an ACH credit entry to the each of the subsidiary bank accounts at other institutions and to offset the debit entries that are being originated. The Bank contacts each subsidiary regarding returns, notifications of change, etc. I will try contacting the payments association sometimes they don't have answers. Thanks.

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#205654 - 06/30/04 02:20 PM Re: Calling ACH experts
MackenzieS Offline
Diamond Poster
MackenzieS
Joined: Jul 2002
Posts: 1,722
Oklahoma
From my ACH Audit Workbook:

"Ensure that agreements have been made with all Origniators (corporate customers) that bind the customer to the aCH Rules, and that within such agreements, the Originator acknowledges that entries may not be initiated that violate the laws of the United States.

Rules Ref(s): Articles 2.1.1 Originator Authorization and Agreement, page OR 2.

Here are a few questions from my audit workbook:

1. Has an agreement been executed between the ODFI and each originating company, which legally binds the Originator to comply with the ACH Rules.

2. Does the agreement address the issues recommended in the Operating Guidelines of the ACH Rules?

3. Do agreements executed on or after September 19, 1997 include the disclosure erquirement in regard to OFAC enforced sanctions?

4. Are agreements specific to the ACH application that is being initiated by the Originator?

5. Do agreements for CBR/PBR entires cover all necessary provisions?

6. Does your institution have written agreements with all third-pary processors used by Originators?

Verify the presence of comapny agreements for every Originator payment application and review agreements for completeness.

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#205655 - 06/30/04 04:43 PM Re: Calling ACH experts
NotALawyer Offline
Gold Star
NotALawyer
Joined: Nov 2001
Posts: 455
From your description, Company XYZ will soon be considered both an originator and a third-party sender – an originator for its own transactions and a third-party sender for the other companies’ transactions. Currently, there might be a gap.

In your particular case, it sounds like you should have a contract with each originator. The NACHA Rules are contract-based. You might not have a direct contractual relationship with the originators of many transactions (those where Company XYZ is submitting transactions for other companies). The Rules will be changing to include a “third-party sender” which, in your case if nothing changes, will require Company XYZ to assume more responsibility and stand between you (the ODFI) and the originators. The Rules originally did not anticipate such an arrangement.

Quote:

Actually, the Bank is sending through an ACH credit entry to the each of the subsidiary bank accounts at other institutions and to offset the debit entries that are being originated.




Would you mind clarifying this? Is your bank collecting the funds from the various receivers and then forwarding it to the various companies? Or is only one transaction taking place debiting the customers’ accounts and crediting the companies’ accounts? If two transactions are taking place (pull money to an account at your bank, then forwarding funds to the other accounts), you might be taking on unnecessary risk.

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#205656 - 07/07/04 01:00 PM Re: Calling ACH experts
Tennismom Offline
Platinum Poster
Tennismom
Joined: Jan 2004
Posts: 778
I believe that effective December 10, 2004 the language will be:

"Ensure that agreements have been made with all Originators or Third Party Senders binding the customer or Third Party Sender to the ACH Rules....."

Similar language has been added to other portions of the Rules that pertain to requirements of ODFI.

Check with your local ACH Association for the 2004 Rule changes.

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