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Mitigating automated clearing house risk through originator training
This paper illustrates the importance of automated clearing house (ACH) originator education and its effectiveness in reducing a financial institution’s overall risk exposure. It summarises the types of risk, reviews changes to NACHA (The Electronic Payments Association) Operating Rules relative to originating depository financial institution (ODFI) warranties and highlights the risk that an ODFI is subject to under these warranties when an originator does not engage in good ACH business practices, thus causing the ODFI to breach the warranties. Also included are suggestions for a focused educational programme and identification of self-help resources for originators and institutions.
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Timothy Mills is the Director of Association Services for the Electronic Payments Network — an ACH operator and regional payments association. He is an Accredited Automated Clearing House Professional (AAP) and has served as a member of the AAP Blue Ribbon Committee and Rules Enforcement Panel. He is also a frequent speaker at regional conferences and payments-related functions.
Jennifer Stanley Vice President, is a senior product manager in ACH and National Retail Lockbox at JPMorgan Chase. Her role focuses on strategic growth, new product and service development, and product enhancement through third-party vendors, alliances, acquisitions and cross-bank initiatives. She holds a bachelor’s degree from Stanford University and a master’s in economics and Japanese from the Johns Hopkins School of Advanced International Studies.
John Biloz is a product manager in ACH and National Retail Lockbox at JPMorgan Chase. He is responsible for day-to-day management of core ACH, cash concentration and tax payment products and services. He holds a bachelor’s degree from MacMurray College and attended the University of Illinois at Springfield for graduate studies. John was also a member of NACHA’s Business Case Evaluation Task Force in 2002 and 2003, and has ten years of experience with ACH.