The proposed rule would apply to Third-Party Senders that are the ODFI’s direct customers, as well as those other Third-Party Senders that are direct customers of the first Third-Party Sender, otherwise known as “nested” Third-Party Senders (The rule would also apply regardless of whether the ODFI allows the Third-Party Sender Direct Access to an ACH Operator. In the case of Direct Access, the ODFI would need to register the Third-Party Sender with NACHA in addition to registering its Direct Access status under 2.17.1 (Direct Access Registration)).
The proposed ODFI rule would include reporting basic information for each Third-Party Sender for which an ODFI originates. The required registration information is:
- the ODFI’s name and contact information;
- the name and principal business location of the Third-Party Sender;
- the routing number and Company Identification used in ACH transactions originated for the Third-Party Sender.
This registration data is basic information that is intended to be simple for ODFIs to provide during the initial registration and periodic update. An ODFI would be required to provide this information for each currently existing Third-Party Sender relationship by the effective date of the Rule, and, after the Rule becomes effective, within 30 days of originating entries for any new Third-Party Sender relationship. After registering a Third-Party Sender for the first time, an ODFI would be required to update the registration information within 30 days of any change, including the termination of the ODFI’s ACH processing relationship with the Third-Party Sender. An ODFI with no Third-Party Sender customers would not be required to submit any information to NACHA.
Beyond the basic registration information defined above, it may become necessary from time-to-time for NACHA to receive additional information about a Third-Party Sender. The Rule provides that, upon receiving a written request from NACHA, an ODFI will be required to provide within 10 Banking Days any or all of the following information that is requested:
- any doing-business-as names, taxpayer identification number(s), and street and website address(es) of the Third-Party Sender;
- the name and contact information for the Third-Party Sender’s contact person;
- names and titles of the Third-Party Sender’s principals;
- the approximate number of Originators for which the Third-Party Sender transmits entries; and
- a statement as to whether the Third-Party Sender transmits debit entries, credit entries or both.
Finally, in order to cover costs associated with the registry, the Rule would require ODFIs to pay a registration charge to NACHA for each Third-Party Sender entered into the registry. As the gateway to the ACH Network, ODFIs are responsible for their Third-Party Senders’ activity, as well as mitigating the risk related to these ACH Network participants. Therefore, it is appropriate for ODFIs that originate on behalf of Third-Party Senders to defray the costs of related risk management tools. Such a registration charge is common in other electronic payment networks, such as for Independent Sales Organization registration. NACHA does not have sufficient information at this time to estimate the amount of the registration charge.
An alternative to a registration charge for each Third-Party Sender would be for NACHA to absorb the cost of the registry within its Network Administration function, which includes other ACH Network risk management services. NACHA’s Network Administration function is funded through Network Administration per-entry fees, which are paid by all ODFIs and RDFIs in the ACH Network. If the cost of the registry is funded by the Network Administration per-entry fees, then all RDFIs and those ODFIs without Third-Party Sender customers would be providing funding the registry.
NACHA does not intend to provide for public disclosure of registry information. An ODFI would be able to view its own information in the registry, but would not have access to another ODFI’s Third-Party Sender registrations. The registry information would be solely for NACHA’s use in its role as ACH Network Administrator. In this capacity NACHA would review and monitor registration data to better inform its risk management strategy. NACHA may also reference the registry during risk investigation activities.
Proposed Effective Date: June 16, 2017
This would be the deadline by which ODFIs initially must register their existing Third-Party Senders.
To allow for implementation to be spread out across a reasonable time period, NACHA would make the registry live prior to the effective date. ODFIs (credit unions) would have a window of at least several months to register their Third-Party Senders prior to the June 16, 2017 deadline.
An ODFI would be required to provide this information for each currently existing Third-Party Sender relationship by the effective date of the Rule, and, after the Rule becomes effective, within 30 days of originating entries for any new Third-Party Sender relationship.
Currently, this is just a proposed rule and no action is required by the credit union. Credit unions may wish to determine the number of Third-Party Senders that the credit union has in order to estimate the time and costs involved with registering them.