Comments to NACHA re: ACH Rules & Compliance Audit Reqs

Maribel Bondoc

Manager, Network Rules

NACHA, The Electronic Payments Association
13450 Sunrise Valley Drive

Herndon, VA 20171

Dear Ms. Bondoc:

Thank you for the opportunity to comment on the recent proposal on ACH Rules Compliance Audit Requirements issued on May 11, 2018. The American Bankers Association appreciates your efforts to provide flexibility to financial institutions (FIs) and third-party service providers (TPSPs) in conducting these audits. We look forward to working with you to make payments safer for all.

This proposal is part of an ongoing effort by NACHA, The Electronic Payments Association to streamline the ACH Operating Rules (Rules) and make them easier to understand, resulting in better compliance. ABA supports this intent and agrees that simpler, clearer Rules will lead to a better payments system for all participants.

The proposal is composed of two initiatives. First, it would consolidate requirements for the annual Rules compliance audit into one section of the rules to clarify the requirements and make it easier to use. Second, it would remove redundant material from Appendix Eight and transfer it to the audit discussion within the NACHA Operating Guidelines (Guidelines).

It would reorganize the Rules related to audits by placing the audit related language currently found in Appendix Eight into the Article One. This is intended to make it easier for users to use and make it more consistent because the language in Appendix 8 has not always been kept up to date with changes in the Rule itself. Incorporating it into the Rules section and eliminating redundant sections should improve its ease of use resulting in better compliance.

The proposal would move the remaining language found in Appendix Eight and move it to the Guidelines in a more generalized format. One benefit of the proposed change is cited as allowing NACHA the ability to “update audit information as industry needs change...” It also notes that it would allow NACHA to make recommendations on other risk-related issues that “should” be considered, but are not mandated by the Rules.

ABA supports NACHA’s ongoing efforts to improve its Rules to make the simpler and easier to understand. ABA supports the intention of this proposed Rule change. However, ABA requests additional commitments and clarification be provided before any changes are made.

In the proposal, it is noted that there are discrepancies between Article One and Appendix Eight. This proposal would repair that. However, it will not stop the problem if NACHA doesn’t commit to making sure that its Rules and Guidelines are updated appropriately in the future to avoid the same problem from cropping up again. ABA requests that NACHA commit to making its Rules and Guidelines consistent henceforth.

The proposal notes that moving language from Appendix Eight to the Guidelines will make it easier to update as needed without the formality of making a Rules change. That can be both a blessing and a curse. The Rules process may be formal, but it ensures industry is made aware of the changes and gives them an opportunity to provide input. NACHA’s ability to change the Guidelines faster than a Rules change, without a balloting process, will need to be subject to industry oversight to ensure that any changes are consistent with industry needs and to ensure that the changes are communicated to the industry effectively.

ABA recommends that any changes to the Guidelines related to audits be proposed to the industry for review before being implemented. This does not need to rise to the level of rulemaking, but should be enough to prevent any further inconsistencies with the Rules or industry needs.

ABA would like to thank NACHA for the opportunity to respond to the Request for Comment on ACH Rules and ACH Audit Compliance Requirements. If you have any questions about these comments, please contact the undersigned at (202) 663-5147.

Sincerely,

Stephen K. Kenneally
Senior Vice President