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Illegal and Unauthorized ACH Liability

Question: 
If we post ACH transactions by account number, as allowed under the ACH Rules, are we in compliance?
Answer: 

With ACH Rules – Yes.
With laws – Maybe not.
If your bank becomes aware, by any means, that an entry is unauthorized (even before it happens), yet your bank fails to investigate or remedy the situation, you could be held liable for the transaction(s). Ex: a non-customer reports that your customer is in a coma (or in jail, or deployed, etc.), yet your bank fails to monitor, investigate or resolve incoming debits that are not consistent with the customer’s activity. This type of activity extends the customer’s Reg E protections under Extenuating Circumstances. If the customer passes and your bank failed to stop unauthorized debit activity on an account with Social Security benefits, your bank could also be liable for overpayments of benefits.
Likewise, failure to monitor for certain types of illegal activity could also result in liability. For ex: your bank’s obligations under Anti-Money Laundering laws.
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Learn more about Rayleen Pirnie’s webinar ACH 201: Rules, Regs and Laws

First published on 04/12/2020

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