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#2173479 - 04/13/18 06:33 PM Hold on ACH Funds
Michelle Offline
Junior Member
Joined: Oct 2017
Posts: 48
Our Risk area wants to place a hold on incoming ACH funds for new accounts - first 30 days. They are quoting BSA that we have the right to hold anything except for government deposits and wires for the first 30 days of account opening. I have checked and say we have to permit availability to ACH deposits. He states he has done this at other banks. Who is correct?
Thanks!

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#2173498 - 04/13/18 07:51 PM Re: Hold on ACH Funds Michelle
Timeline Offline
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Joined: Dec 2011
Posts: 107
Has he not heard of Same Day ACH?

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#2173510 - 04/13/18 08:20 PM Re: Hold on ACH Funds Michelle
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 77,239
Galveston, TX
They are quoting BSA

Really?
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#2173517 - 04/13/18 08:34 PM Re: Hold on ACH Funds Michelle
Complycated Offline
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Joined: Aug 2013
Posts: 149
According to our state ACH association there is a provision in Reg CC that allows an RDFI to delay the availability of ACH credits in the event we think they may not be unauthorized. The following is an excerpt from the association's procedures information:

Voluntary Availability Exception for Credit Entries
RDFIs can take advantage of a voluntary exception from the existing funds availability requirements prescribed in the Rules when it reasonably suspects that an ACH credit is not authorized. This exception allows an RDFI additional time to investigate a suspicious credit prior to making funds available to the Receiver. The additional time increases the likelihood that unauthorized credit entries could be identified and the associated funds could be recovered before they are withdrawn. An RDFI also could, but is not obligated to, use this exception to respond to a request from an ODFI to investigate or return the funds related to a credit Entry. ODFIs and RDFIs can work together, on a voluntary basis, to investigate a possible case of an unauthorized credit transaction. (Note: RDFIs must still comply with Regulation CC availability requirements, unless an exception to the requirements applies.) (Section III – Chapter 26, NACHA Operating Rules and Guidelines)

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#2173519 - 04/13/18 08:35 PM Re: Hold on ACH Funds Michelle
Complycated Offline
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Joined: Aug 2013
Posts: 149
In my opinion it doesn't give an RDFI the ability to delay all ACH credits on new accounts.

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#2173576 - 04/16/18 12:53 PM Re: Hold on ACH Funds Michelle
Michelle Offline
Junior Member
Joined: Oct 2017
Posts: 48
Thank you all, I appreciate your input.

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#2226654 - 12/03/19 08:55 PM Re: Hold on ACH Funds Michelle
travelgirl1 Offline
Member
Joined: Sep 2015
Posts: 81
Similar case here but I'd like to know thoughts on initial ACH deposits to new CD's. The bank currently opens consumer DDA, SAV and CD's online. Retail would like to significantly increase the maximum amount a new customer can deposit on their initial, CD opening deposit. To fill a risk gap, management (specifically the bank owner) would like to place a 60 day hold on all initial ACH deposits to CD's to cover the bank from unauthorized returns. Reg CC does not cover CD deposits. Like others have mentioned, we initiate the ACH to debit the money from the outside account - which I believe makes us the ODFI (not an ACH expert here). It also looks like we can only claim the exception mentioned above in circumstances where we believe something is unauthorized - which we wouldn't have in most cases.

From what I've read, it would appear NACHA rules require the bank to make the ACH deposit available right away. Can someone confirm this and provide a citation to reference?

If that's not correct, what other reason prevents the bank from placing this longer hold? I'm not at all in favor and am looking for something stronger than a reputation risk. Of course we would need to disclose this practice in new account disclosures. I was hoping I could get the practice to fit under one of the UDAAP definitions but I don't think it does.

My recommendation (in addition to any other risks or prohibitions that any of you have) is if someone wants their money back in the first 60 days, the bank require any return be sent back to the original account where the money was taken. And disclose this requirement at account opening.

Appreciate any help.

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#2226657 - 12/03/19 09:53 PM Re: Hold on ACH Funds Michelle
John Burnett Offline
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John Burnett
Joined: Oct 2000
Posts: 39,333
Cape Cod
The whole concept of "availability" doesn't apply to CD deposits in the first place, and even if Reg CC DID apply, the credit to the CD isn't an ACH entry anyhow. It's an internal credit to the CD account, offset by the ACH DEBIT sent to the customer's other bank to pull the funds from there. If that ACH debit gets returned to you for any reason (insufficient funds, their customer stopped payment, the transfer was fraudulent and not authorized by the owner of the account debited, etc.), your bank will be charged for the returned debit and you won't have any choice but to remove the funds from the CD account (or extract it from your customer in some other way, I suppose). You can't refuse a returned ACH debit if it's timely, and some ACH debits can be returned under limited circumstances up to 60 days after their Settlement Dates.

What sort of "unauthorized returns" does management think could occur? Doesn't management understand that a CD account comes with bank control over the funds, if you want it. You can include language in the deposit contract disallowing any early withdrawals, for example. But even that won't protect the bank if the check or ACH debit used to fund the CD bounces.
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#2226661 - 12/03/19 11:02 PM Re: Hold on ACH Funds John Burnett
travelgirl1 Offline
Member
Joined: Sep 2015
Posts: 81
Thanks John. Helpful as always. While I realize the potential for this to actually happen is low, our maximum deposit is very high. Management is concerned that large funds could be deposited at the bank using money that doesn't belong to the new CD customer. The new CD customer coming in within the first 60 days and deciding to cash in the CD early (and paying early penalties is fine because they are frauding the bank anyhow). There is concern of a charge back in that 60 days. This also assumes the rightful owner of the money hasn't discovered it's missing.

Yes, I realize we can disclose / contract what we want on CD's but I'm concerned a 60 hold would bring complaints and reputation risk. Thanks for the information. It brought me clarity over the how funds are moved (i.e. the initial deposit is technically not an ACH deposit).

My recommendation will be to disclose that any returns / withdrawals in the first 60 days must be returned via ACH to the same account from which it came.

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