New Nacha Rule on Enforcing Egregious Violations Takes Effect Jan. 1, 2021

Author

Michael W. Kahn

Michael W. Kahn

Nacha

New Year’s Day 2021 brings with it a change to the Nacha Operating Rules. If you haven’t already, the time to familiarize yourself is now. 

The new Rule defines an “egregious violation” as a willful or reckless action by a Financial Institution, Originator, or Third-Party Sender, involving at least 500 entries or multiple entries totaling a minimum of $500,000. 

In additional to its other responsibilities and oversight functions, the ACH Rules Enforcement Panel will have the authority to determine whether a violation is “egregious.” If it is, the Panel can then determine whether it’s a Class 2 or Class 3 Rules violation. For Class 3 violations, Nacha will have the authority to report it to the ACH Operators, federal and state banking officials, consumer protection authorities, and other appropriate regulators and agencies.

“Nacha continuously works to ensure the safety and security of the ACH Network for all participants, and this new Rule gives us better ability to enforce the Rules for egregious violations,” said Michael Herd, Nacha Senior Vice President, ACH Network Administration. “While the likelihood of there being an egregious violation is already low, we expect the new Enforcement Rule will lessen the risk even further.”

Click here to learn more about the new Rule.