ACH Fraud: NACHA Promotes Detection Across Transactions

April 23, 2024 by Verafin

ACH fraud prevention

Last year, NACHA’s ACH Network saw its eleventh straight year of growth exceeding $1 trillion as demand from consumers for electronic payments increased — and fraudsters are following the money. As Business Email Compromise (BEC) and other authorized push payment (APP) scams cause concern in the financial industry, NACHA has issued new rules to strengthen their network against these scams by promoting detection across the entirety of ACH payments — from origination to receipt. 

NACHA’s decision comes with important ramifications, empowering Originating Depository Financial Institutions (ODFIs), while cementing a defined role for Receiving Depository Financial Institutions (RDFIs) in ACH fraud prevention for the first time. With the rule to be fully enacted in 2026, financial institutions across the network must adopt a holistic ACH fraud solution to ensure they are ready for the future, today. 

New Rules, New Considerations

Approved in March 2024, the new NACHA rules require RDFIs to monitor their inbound ACH transactions for fraud and assist in reversing the payment in cases where a transfer is suspicious, or fraud is identified. When fraud is detected, the rules empower ODFIs to request the return of an ACH payment for any reason. They also enable RDFIs to: 

  1. Delay funds availability for closer scrutiny of the payment. 
  2. Proactively return a suspicious transaction without a request or a customer claim. 

While these new rules do not promote a shift in liability for fraudulent transactions, they stress a whole-of-transaction approach to fraud prevention by placing an onus on all financial institutions that participate in the ACH Network to monitor transactions. What is the best approach to empower financial institutions to comply? 

Enabling ACH Fraud Prevention Across ACH Payments

Whether your institution is an ODFI, RDFI or both, a consortium approach to ACH fraud prevention can help you satisfy the new NACHA requirements and combat fraud with confidence. 

By considering hundreds of millions of counterparties from thousands of financial institutions, consortium analytics enable RDFIs to monitor ACH credits in real-time and verify that the name on the payment at the RDFI matches the name at the ODFI. This complete view of the transaction also improves the prevention of APP fraud by helping to identify money mules hidden within your institution. 

For ODFIs, the benefits of a consortium approach to ACH fraud are equally significant. You gain robust detection with powerful evidence such as counterparty risk, account linking, payor exposure and more, while reducing false positives, customer friction and operational costs. With real-time analysis, your institution will be alerted on potential fraud in real time and can take decisive action to stop losses — before funds are released from the Federal Reserve. 

Prepare for Tomorrow, Today

With a 2026 deadline established to conform to NACHA’s new rules, and the threat from BEC and other scams an ever-present challenge, the time is now for financial institutions to consider a new approach to ACH fraud prevention. 

Combining behavioral evidence with insights from consortium analytics, Verafin’s ACH Fraud solution provides financial institutions with powerful ACH fraud prevention. By offering insight into both the payor and payees who do not bank at your institution, Verafin provides a robust and effective solution to effectively protect your customers and institution as demand for ACH payments grows. 

To learn more about our ACH Fraud solution, visit our website and download our Feature Sheet

Verafin is the industry leader in enterprise Financial Crime Management solutions, providing a cloud-based, secure software platform for Fraud Detection and Management, BSA/AML Compliance and Management, High-Risk Customer Management and Information Sharing. Over 3800 banks and credit unions use Verafin to effectively fight financial crime and comply with regulations. Leveraging its unique big data intelligence, visual storytelling and collaborative investigation capabilities, Verafin significantly reduces false positive alerts, delivers context-rich insights and streamlines the daunting BSA/AML compliance processes that financial institutions face today.

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