ACH Network Participants and Roles Flashcards

What is the primary obligation of an RDFI when it receives an ACH debit entry?

Answer: Post the entry to the Receiver's account unless a valid return reason exists

The RDFI must post ACH entries to the Receiver's account unless it has a valid return reason under the NACHA Operating Rules.

Which party in the ACH network bears ultimate responsibility for the actions of a Third-Party Sender?

Answer: The ODFI

The ODFI is ultimately responsible for the actions of its Third-Party Senders and must ensure their compliance with NACHA Operating Rules.

A Nested Third-Party Sender is defined as:

Answer: A TPS that itself uses another TPS to transmit entries to an ODFI

A Nested Third-Party Sender is a TPS that contracts with another TPS (rather than directly with an ODFI) to transmit ACH entries, creating a layered origination structure.

When a non-participating DFI's customer receives an ACH entry, which entity typically acts as the RDFI?

Answer: A correspondent or gateway institution that processes on behalf of the non-participating DFI

Non-participating DFIs do not have direct ACH network access, so a correspondent or gateway institution acts as the RDFI and passes the entry through.

Before originating entries for a new Originator, an ODFI is required by NACHA rules to:

Answer: Conduct a risk assessment and due diligence review of the Originator

NACHA rules require ODFIs to perform due diligence and a risk assessment of new Originators before transmitting entries on their behalf.

An ODFI's warranty to the ACH network when transmitting entries includes:

Answer: That entries comply with NACHA Operating Rules and that the Originator has obtained proper authorization

By transmitting entries, the ODFI warrants that they comply with NACHA Operating Rules and that proper Receiver authorizations have been obtained.