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Sound Business Practices for the ODFIs of Third-Party Senders: Part 2

(Part 1)

Third-Party Senders are an important part of the ACH Network providing a range of services to Originators and ODFIs. This is the second of two articles in which Nacha’s Risk Management Advisory Group (RMAG) provides advice on sound business practices surrounding Third-Party Senders.

RMAG recommends these additional sound business practices for ODFIs of Third-Party Senders:

  1. Fully understand the Third-Party Sender’s business model, which includes identifying the types of Originators that are part of its customer base, and the onboarding and due diligence process of the Third-Party Sender for new customers.
  2. Third-Party Senders should have the same expectations of their underlying Originators that the ODFI has of the Third-Party Sender. This includes, but is not limited to, robust agreements, underwriting, and onboarding due diligence.
  3. Look for potential warning signs among the customer base of the Third-Party Sender. For example, the use of different trade names or registered names by using “on behalf of” or “doing business as.”
  4. Look for Third-Party Senders who are part of the Nacha Certified program. These Third-Party Senders have demonstrated compliance with Nacha Operating Rules requirements and guidance and principles of sound corporate governance and business practices.

During the RMAG discussion, one member stated: “Don’t be the ODFI of Least Resistance.”

The member-only Risk Management Advisory Group (RMAG) works with industry stakeholders and key Nacha staff to continually assess risks faced by Network participants. The group makes recommendations to Nacha about risk education, tools and resources, risk mitigation policies and potential rule changes. Learn more.