Effectively managing third-party sender risk in the ACH Network

Abstract

The Automated Clearing House (ACH) Network offers many options for financial institutions and third-parties to provide transaction processing. In one example, a third-party acts as a sender of ACH transactions by originating debits for its originators through its banking relationship with a financial institution. This role introduces unique opportunities, as well as obligations, for all parties in maintaining diligent risk management processes. This paper focuses on the role of the third-party sender, its unique relationships with other Network participants and application to global transactions, appropriate due diligence processes for engaging a third-party sender, and sound business practices for risk management with third-party senders on the ACH Network.