ACH exposure limits

Posted By: morirse de risa

ACH exposure limits - 03/23/10 10:00 PM

Do we need to have ACH exposure limits established and reviewed annually for customers (individuals & businesses) using the ACH system to initiate monthly funds transfers?
Posted By: A_G

Re: ACH exposure limits - 03/24/10 01:15 PM

It's an effective risk management technique. Exposure limits should be reviewed annually for Originators. Your annual NACHA audit should look for this process to be in place.
Posted By: HappyGilmore

Re: ACH exposure limits - 03/24/10 01:16 PM

from a risk exposure standpoint, yes, you should. your contract with your customer should spell this out, and you should also be reviewing debit originators reject return rate for unauthorized items to see if a pattern is emerging.
Posted By: morirse de risa

Re: ACH exposure limits - 03/24/10 01:33 PM

We do review the businesses annually, but we have never annually reviewed those that we initiate a funds transfer for or a loan payment for. Many of our monthly loan payments are $500 or less. They only sign an authorization form for this. Would those need to have limits assigned?
Posted By: HappyGilmore

Re: ACH exposure limits - 03/24/10 01:55 PM

Maybe I'm misunderstanding the question. You as the bank are originating ACH debits to your customer's account at another institution for a loan payment to yourself? if this is the case, then no, you don't need to do anything other than have written authorization from the customer.

However, if you have a corporate customer that is providing you an ACH origination file that you are sending on their behalf, then this would need to have exposure limits in place.

As far as wire transfers, you should have an agreement in place for corporate customers as to who can do wires, what their limits are, dual control, etc. For individual customers that come in to do a wire once in a while, an agreement/instruction sheet should be signed every time.
Posted By: morirse de risa

Re: ACH exposure limits - 03/24/10 02:03 PM

Yes, we originate a lot of ACH debits to our customer's accounts at other banks for loan payments at our bank. Glad to hear I don't need more than the written authorization we already have.

We do have some business that don't provide us with a file (no payroll or billings) but they do want us to send a credit/debit from their account with us to their account with another bank. Some of these can be up to $25,000. If I understand right, we don't need exposure limits for this situation per the Rules?
Posted By: BetsyS

Re: ACH exposure limits - 03/24/10 02:49 PM

I think the difference in your scenario and Happy's is that your institution is the Originator (originating company).
Posted By: morirse de risa

Re: ACH exposure limits - 03/24/10 03:09 PM

Right we are both the the ODFI and the originating company for these situations. Are we required to have limits in this situation?
Posted By: HappyGilmore

Re: ACH exposure limits - 03/24/10 07:30 PM

not if you are both...if you had a customer that was the originating company and you were the ODFI, then yes, you would need something in place
Posted By: morirse de risa

Re: ACH exposure limits - 03/24/10 08:21 PM

That's the answer I was hoping for - thanks!