Good afternoon,

We have an LLC business account wherein the owner originated an ACH debit to pay himself (sending funds to his personal account at another institution). Our examiner has commented that we must prevent him from doing so. While I understand the potential implications of Reg. E and NACHA dispute rules (when personal transactions run through a business account or vice versa), this appears to be how he takes distributions from his business and I can't find any NACHA rules requiring us to identify or stop these transactions. Any thoughts? What am I missing?

Have you asked the examiner for the reasoning behind his recommendation? Is this a single member LLC?

It is a multi-member LLC and this individual is both an owner and control person. He originates ACH distributions to himself and to other owners. I was not present for the exit discussion, so I'm unsure of the examiner's specific concern. With that said, if there are no NACHA rules in this area, it may simply be about the potential liability in a dispute scenario. I just want to ensure I'm not missing another potential concern.

If you have the proper corporate resolutions appointing this person has having the authority to initiate ACH transaction on behalf of the LLC, I fail to see any liability presented. The authorized person can send ACHs to whoever they wish and it would be up to the LLC to internally police the activity of the authorized person to make sure all transaction were actually authorized.

Thanks...very helpful as always!