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FEDERAL RESERVE BANK
OF NEW YORK
[
Circular No. 10288 ”1
March 2, 1989
REDUCING RISKS ON AUTO M ATED CLEARING HO USE TRANSACTIONS
Revised Proposal on the Treatm ent o f ACH Transactions
Comm ent Invited by M arch 31, 1989
To the Chief Executive Officers o f All Depository
Institutions in the Second Federal Reserve District:
Following is the text of a statement issued by the Board of Governors of the Federal Reserve System:
The Federal Reserve Board has issued for comment a series of revised proposals regarding the finality accorded au
tomated clearing house (ACH) credit and debit transactions processed by Federal Reserve Banks.
Comment is requested by March 31, 1989.
Comment was previously requested on a series of proposals in December 1986 (Docket No. R-0515-C). Since a
majority of commenters opposed those proposals, the proposals have been revised to include the following provisions:
• Grant finality to receivers of ACH credit transactions at 6:30 p.m. local time on the settlement day;
• Treat credits given to originators of ACH debit transactions as final payments at 10:00 a.m. local time on the busi
ness day following the settlement day;
• By the time set for finality of ACH payments, advise depository institutions with on-line connections to Fedwire
that payments are being reversed, and endeavor to so advise off-line institutions by telephone;
• Reserve the right to debit the reserve/clearing accounts of depository institutions originating ACH credit transac
tions at any time during the settlement day; and
• Grant credits for debit-item adjustments only when the Reserve Banks can recover credit from the originating de
pository institution.
Enclosed — for depository institutions in this District — is the text of the Board’s proposal, as submitted for
publication in the Federal Register. Comments thereon may be sent to the Board of Governors, as specified in the
Board’s notice, or to Andrew Heikaus, Manager, Funds Transfer Department at this Bank, by March 31, 1989.
Copies of the enclosure will be furnished to others upon request directed to our Circulars Division (Tel. No.
212-720-5215 or 5216).
E. G erald C orrigan ,
President.
FEDERAL RESERVE SYSTEM
[Docket
Risk
on
AGENCY:
Board
ACTION:
Request
SUMMARY:
The
("Board")
is
Reserve
Automated
of
Governors
for
Board
transactions.
of
implementing
in
May,
1985.
the
changes
risk
(S e e ,
House
Federal
of
changes
Funds
proposed
Transactions
Reserve
Federal
in
clearing
are
intended
policy
statement,
Transfer
System.
the
Reserve
way
that
house
as
System
Federal
("ACH")
additional
adopted
by
"Reducing
Systems,"
50
steps
the
Board
Risks
Fed.
on
Reg.
include:
granting
finality
to
transactions
at
6:30
settlement
the
changes
reduction
policy
21120.)
0
the
automated
Electronic
°
of
several
Large-Dollar
The
Clearing
Governors
treat
These
in
R-0661]
comment.
proposing
Banks
No.
receivers
of
ACH
credit
p.m.
local
time
on
the
day;
treating
credits
given
to o r i g i n a t o r s
of A C H debit
t r a n s a c t i o n s as
final
payments
at
10:00 a.m.
local
t i m e on
the
business
date
following
the s e t t l e m e n t
day ;
0
advising
depository
institutions
with
on-line
connections
to
Fedwire
that
payments
are
being
reversed
by
the
time
set
for
finality
of
ACH
payments;
0
°
endeavoring
to
advise
telephone that payments
reserving
accounts
the
of
right
credit
transactions
settlement day;
and
[Enc
Cir. No. 10288]
to
depository
off-line
are being
debit
institutions
reversed;
the
reserve/clearing
institutions
at
any
time
by
originating
during
the
ACH
-2-
«
DATE:
granting
credit
for
debit
item
adjustments
only
when
the
Reserve
Banks
can
recover
c r e d i t from the
originating depository
institution.
Comments
ADDRESS:
may
be
C.
mailed
20th
5:15
p.m.
9:00
a.m.
§
or
and
5:00
only,
to
be
p.m.,
B-2223
Regarding
as
Docket
of
Mr.
inspected
except
1989.
the
Avenue,
of
room
31,
to
Governors
attention
may
Rules
refer
Constitution
delivered
INFORMATION
of
I.
Federal
Ireland,
M.
N.
W.,
between
in
room
provided
No.
R-0661,
Federal
William
Availability
CONTACT:
Reserve
W.
Wiles,
8:45
a.m.
and
between
section
of
Reserve
Washington,
B-1122
in
261.8
Information,
Washington,
of
D.
of
12
Telecommunications
Earnestine
Hill
SUPPLEMENTARY
or
Dorothea
of
For
20551.
Device
for
Thompson
Adviser,
(202/452-3955);
Counsel
Attorney,
Governors
C.
Young,
Operations
General
Senior
Board
Florence
Bank
Associate
Boutilier,
(202/452-2418),
System,
the
of
March
261.8.
Division
Elaine
and
by
should
Board
Comments
FURTHER
Oliver
the
to
received
which
Street
Board's
C.F.R.
FOR
to
20551,
Secretary,
the
oe
Comments,
System,
D.
must
(202/452-3625),
Legal
Division
Federal
the
or
the
h e a r ing
the
Deaf
Reserve
impaired
(" T D D " ),
(202/452-3544).
INFORMATION:
Background
Two
credit
credit
payment
types
of
transactions
transactions,
to
tne
payments
and
debit
funds
receiver.
flow
the
transactions.
flow
The
over
from
majority
the
of
ACH
In
mechanism
the
case
of
-ACH
originator
of
ACH
payments
credit
the
3
are
payroll,
deoit
pension,
transactions,
originator.
collect
The
cash
In
the
the
proportion
of
The
may
addition,
the
night
The
is
one
processed
cycle.
on
given
entries
are
to
ACH
posted
transactions
until
the
right
to
Previous
may
of
December
settlement
currently
the
on
mortgage
draw
receiving
to
loan
used
down
for
for
balances
located
the
largest
Transactions
settlement
--
the
right
day
debit
day
to
a
or
until
given
Reserve
following
a
reverse
credit
by
and
payments.
transactions
and
may
date
a
provisional
reversed
the
are
cycles
day,
be
used
transactions.
credit
the
for
Bank
settlement.
transactions
have
the
comments.
1986,
tne
(Docket
No.
Board
local
time
on
requested
comments
on
the
R-0591):
to
provide
finality
to
transactions
amounting
p.m.
°
ACH
the
subsidiaries
are
reserve
business
and
proposals
0
the
to
operating
of
and
mechanism.
transactions
to
are
ACH
them.
proposal
following
on
ACH
of
receiver
account
before
two
institutions
return
In
days
of
or
case
transactions
is,
they
of
the
transactions
that
currently
debit
audition,
two
receivers
opening
debit
value
In
payments,
value-dated
one
Banks
credits
In
a
or
All
Reserve
bill
and
the
debit
affiliates
dollar
ACH
from
ACH
purposes,
country,
originated
be
of
ACH
of
payments.
flow
premiums,
accounts
throughout
be
funds
concentration
from
annuity
majority
insurance
payments.
or
-
the
receivers
to
$5,000
settlement
of
or
ACH
less
credit
at
1:00
date;
to
provide
finality
to
receivers
of
ACH
transactions amounting
to m o r e t h a n
$5,000
credit
when
the
Reserve
finally
collected
Banks
have
funds;
received
actually
and
4
-
°
to
notify
receivers
-
of
ACH
credit
payments
were
reversed
before
on a "best e f f o r t s " basis; and
°
to
retain
the
tr a n s a c t i o n s at
received
The
The
of
Board
majority
the
tnat
and
received
was
large-dollar
amounts
proposed
granted
at
a
smail-aoliar
credit
opening
oelieved
of
tnat
large-dollar
believed
that
final
the
at
creait
opening
rinaily
until
collected
participating
that
tne
proposal
of
would
the
and
on
that
and
uncertainty
reduce
credit
be
to
the
add
the
than
had
their
resulting
attractiveness
from
of
treated
for
and
ACH
ACH
debit
actually
to
the
They
ACH
and
risk
of
indicated
adoption
the
as
day.
received
customers.
of
percent
finality
substantially
at
finality
be
more
final
commenters
50
should
or
be
that
as
settlement
$5,000
should
All
for
more
dollar
transactions.
day.
delaying
Banks
the
treated
set
case
oetween
believed
settlement
be
that
the
commenters
finality
transactions
Reserve
funds
ACH
should
amounting
the
that
should
business
institutions
increased
woiila
time
In
distinguish
commenters
oelieved
transactions
transactions
all
the
credit
proposals.
to
transactions,
ACH
proposals.
these
transactions,
the
on
on
reason
for
has
funds.
transactions,
and
if
finality
ACH
debit
Reserve
Bank
credit
transactions
Commenters
creait
of
specific
all
good
time
business
a
ACH
the
of
collected
comments
arbitrary,
specific
percent
finally
opposed
credit
were
Eighty-five
the
no
and
112
concerning
there
time
right
to
reverse
any time until the
actually
commenters
proposals
stateu
small
of
transactions
the
of
this
mechanism.
5
-
A
majority
at
a
the
of
commenters
specific
same
time
time
argued
and
oe
-
that
indicated
designated
finality
that
for
they
both
should
would
be
prefer
and
debit
granted
that
credit
transactions.
If
ACH
tne
credit
day,
suggested,
the
institutions
not
be
surficient
The
concerning
be
settlement
balance
the
receiving
i
at
Board
faced
transactions
late
Banks
to
recover
originator
is
unable
g incited .
no
enough
large
adopt
the
the
Board
payments.
should
settlement
the
it
be
made
small-dollar
prefer
proposal.
granted
would
had
this
if
they
business
Banks
risk,
institution
the
funds,
cover
of
receiving
day
would
believes
be
the
some
to
and
the
settlement
that
Reserve
should
on
the
all
on
Banks'
because
the
for
proposal
by
distinction
opening
to
by
on
cover
uelieves
great
faced
Reserve
commenters
the
time
Reserve
or
risk
too
to
accorded
institutions,
credit
a
is
The
1986
originating
that
While
business
the
increased
the
believes
the
on
payments
finality
of
currently
account
finality
day,
Banks
an
its
granted
Reserve
time,
in
transactions.
finality
ACH
whether
Board
the
commenters
any
grant
opening
substantially
to
funds
the
to
eliminated.
reverse
regard
were
exposure
be
be
to
at
many
would
aDle
credit
as
credit
would
without
Banks
transactions
settlement
nowever,
Reserve
with
that
at
is
payments
the
faced
by
the
In
order
that
faced
finality
6:30
day
that
on
risk
ACH
to
p.m.
that
it
by
for
local
permit
determined
to
the
that
has
- 6 -
With
ACH
debit
and
commenters
specific
time
not
for
treat
credits
final
at
the
adopted
given
Banks'
given
10:00
to
a.m.
settlement
risk
ACH
would
the
local
time
on
that
differ
or
provide
Board
debit
Bank
substantially
circular
To
ACH
Reserve
a
transactions.
the
the
of
debit
institutions,
of
majority
a
not
for
received
which
1986.
originators
given
had
indicated
operating
in
credits
they
They
for
comment
depository
after
after
current
for
treat
funds,
proposal.
the
published
to
only
collected
credits
of
proposal
final
be
Reserve
terms
certainty
as
this
should
reverse
the
proposal
the
finally
opposed
The
unuer
to
transactions
actually
would
regard
the
greater
proposes
to
transactions
business
day
as
following
day.
D i s c u s s ion
Three
finaxity
and
for
issues
ACH
customs;
Reserve
that
may
and
cnanges
result
in
ACH
in
to
At
settle
the
credit
in
the
for
same
an
the
use
--
indicates
time,
item
is
the
after
of
The
that
current
the
Federal
and
(3)
the
potential
for
ACH
transactions
mechanisms.
Reserve
Banks '
for
Banks
of
of
practices
payment
available
notice
timing
by
credit
Reserve
the
faced
finality
of
in
(1)
institutions;
Practices
transactions
considered
exposure
treatment
shifts
currently
credit
day.
the
been
transactions:
depository
Current
circular
credit
(2)
by
have
tne
given
use
ACH
to
on
reserve
operating
receivers
the
the
suspension
of
settlement
right
or
not
closing
7
-
of
the
the
originator
Reserve
item
if
a
funas
in
cover
the
have
Banks
Reserve
tne
on
are
to
Regulation
E,
and
preempt
(1 2
via
no
oay
depository
settlement
the
the
that
229.10(b))
institutions
day
ACH
but
does
Uniform
2/
Ibid. , p a r a graph
to
31.
--
Letter,
Banks
be
Banks
have
been
are
not
transactions
provided
the
CC,
depository
The
institutions
of
business
of
paragraphs
does
E
not
requires
accounts
day,
24
the
availability.
Regulation
time
make
for
on
but
earlier
consumers'
to
available
date,
require
a
to
all
transactions.
opening
specify
day
Regulation
transactions
Board's
sufficient
until
influence
depository
may
credit
transactions.
also
credit
not
Operating
of
a
Reserve
before
typically
settlement
The
the
Reserve
credit
credit
than
rules
j./
requires
following
$
--
ACH
be
accounts
institutions
rules
ACH
later
existing
C.F.R.
CC
not
settlement
clearing
would
addition,
for
transactions
regulations
of
may
provisions,
reversal
and
treatment
received
business
the
NACHA
Regulation
withdrawal
notices
In
settling
the
Further,
depository
rules
on
or
day.
or
there
credit
reserve
following
institutions'
funds
reverse
althougn
day
that
these
received.^/
on
account
on
settlement
is
acting
judges
Based
to
Other
Board's
Bank
notify
reversed
business
cease
affecting
the
obligated
receiver
originator's
right
transactions
the
may
item.fi/
the
posted
or
-
and
and
25.
as
it
of
the
does
- 8 -
not
require
depository
use
on
and
Official
the
day
Staff
incorporated
Letter,
to
are
make
payments
they
in
tunas
on
are
stringent
depository
consumers
at
the
Current
are
opening
receiving
institutions
are
generally
o u s m e s s
vary;
the
funds
day,
settlement
day.
3/
Operating
Association,
4/
Operating
House
be
or
Rules
pages
not
of
guidelines
available
settlement
and
days
make
annuity
with
Funds
the
to
on
the
customers
day
Automated
the
payments
data
opening
availability
business
National
The
transaction
at
to
payments
business
institutions
the
provided
date.
these
of
d a y . 4/
before
generally
to
of
practices
on
the
following
Clearing
the
House
12.
Guidelines
Association,
are
institutions
corporate-to-corporate
available
the
funds
two
are
corporate
pension,
or
which
Operating
NACHA
settlement
night,
until
rules,
and
the
opening
date.
made
OR
the
receiving
settlement
may
settlement
to
one
data
the
at
on
Payroll,
dollar
processed
provided
on
at
make
for
205.10(a)(2)
depository
Further,
to
§
available
ACH
consumer
institutions
Larger
typically
—
before
consumers
day.
both
transaction
depository
to
settlement
and
Uniform
require
processed
date,
avaiiaole
NACHA
business
Practices
typically
of
Q10-13.)
day.;L/
of
funds
C.F.R.
institutions
settlement
majority
for
make
(12
Banks'
and
settlement
encourage
payments
Reserve
available
the
to
credited.
Commentary,
the
more
institutions
pages
of
OG
the
V - 8 .
National
Automated
Clearing
-9-
Credit
depository
Exposure
institutions
inversely
based
transactions.
depository
on
receiving
exposed
some
to
the
business
aue
to
most
customers
Banks
reserve
originator
is
nnancial
this
"problem"
receiving
loss,
risk.
to
the
a
which
In
audition,
procedures
that
permit
have
do
funds
they
is
is
until
the
posted.
time
If
their
used,
Reserve
the
Banks'
discovered
until
to
Reserve
reimburse
payments
as
risk
the
have
not
well
available
though
not
as
This
been
The
generally
day
transactions
it
its
are
the
risk
that
an
day
day.
institutions
Banks
credit
that
the
them
is
exposed
has
have
institutions
Banks
require
to
taken
the
steps
risk
to
implemented
transactions
Reserve
to
are
Reserve
Reserve
ACH
institutions,
even
loss.
fund
The
monitor
aay
funds
Federal
positions.
in
to
making
customers
reduced,
operating
day.
of
accounts
the
is
ACH
settlement
settlement
reverse
experience
settlement
Wniie
the
for
situations
tne
procedures
to
and
unable
the
varies
rise.
current
practice
clearing
would
on
by
credit
risk
institutions
settlement
institution
to
reduce
the
reversed
limited
of
loss
right
and
are
following
on
to
Banks'
following
the
reserve
institution
is
of
ACH
Reserve
tends
faced
Reserve
accorded
Federal
risk
institutions'
tneir
depository
finality
as
exposure
Federal
depository
risk
day
credit
the
Reserve
circular,
payments
is,
institutions'
the
The
and
the
That
Under
all
--
originated
in
are
problem
weak
by
financial
implementing
depository
- 1 0 -
institutions
of
credit
to
prefund
transactions
deposited
for
transactions
highly
loss
not
are
value
depository
of
these
diverse
appear
tne
ACH.
by
90
the
percent
pension,
payments
cover
time
group.
As
a
institutions
of
and
is
receiving
the
ACH
for
in
that
there
for
ACH
the
they
all
ACH
annuity
less
such
value
are
than
the
credit
payments.
$600,
payments
result,
receiving
the
day
funus
depository
practices,
the
and
The
the
are
generally
potential
financial
small-dollar
transactions,
more
the
should
certainty
grant
payments
depository
day.
for
Board
the
the
change
Terms
has
--
of
a
is
the
time
typically
Banks,
the
to
granting
opening
of
business
and
provide
incentives
their
payment
practices.
for
at
does
transfers
that
review
depository
of
It
between
After
this
Banks.
funds
--
distinction
that
of
in
credit
which
the
objective
close
therefore,
the
current
and
payments
Federal
ACH
First,
the
institutions
shifts
determined
receivers
Reserve
Reserve
at
mechanisms
Accomplishing
institutions
The
lessen
to
of
believes
potential
regarding
Transactions
shift
transactions
exposure
the
a
Board
could
provide
finality.
proolems
the
Finality
and
Payment
been
transfer
credit
Banks,
policies
has
of
institutions
Proposed
Reserve
Use
credit
settlement
and
the
Nevertheless,
finality
at
to
substantial.
not
tne
over
payroll,
Changes
on
collateral
originated
institutions
faceu
pledge
processing.
Furthermore,
median
or
Reserve
transactions
Reserve
poses
several
supervisors
institutions
generally
Banks
of
late
would
not
in
oe
-li
able
to
begin
originator
Second,
is
over
all
of
the
closing
and
ACH
be
will
order
to
receiving
credit
receiver
settlement
may
be
da^ .
transactions
will
be
institutions
with
on-line
local
on-line
items
receiving
tnat
do
Bank
will
local
it
be
name
have
attempt
Due
for
the
notice
should
to
the
6:30
the
time
afternoon.
be
While
affected
potentially
a
by
large
considerable
those
institutions
for
the
the
Reserve
Board
final
will
proposes
payments
receiver
provide
of
of
to
by
6:30
p.m.
final.
by
to
losses
not
of
that
Board
may
Therefore,
before
6:30
to
time,
then
an
the
institutions
the
by
Reserve
6:30
p.m.
potentially
have
does
accrue
the
to
sent
Fedwire,
making
whose
notice
those
telephone
the
that
wire
local
For
institutions
day,
is
the
receiving
Fedwire
reversal
to
on
a
means
difficulty
p.m.
the
by
notice
the
as
by
institution
be
to
faced
originating
connections
give
accept
by
to
to
for
a
and
treated
connections
on-line
business
given
of
calls
not
notify
Banks
institution
telephone
would
an
mechanism.
institutions,
be
reversed
If
the
ACH
risks
local
considered
time.
closed
not
be
not
numerous
that
time.
will
the
Reserve
tne
p.m.
to
that
reversed.
p.m.
institutions
the
affected
depository
The
in
institution,
required
balance
6:30
use
be
transactions
at
late
ordinarily
originating
may
transactions
Banks
tne
one
time
In
that
institutions
institutions
until
institutions
institutions
of
receiving
closed
20,000
of
of
amount
that
being
these
number
notifying
firm
already
not
if
believe
notice
6:30
p.m.
can
- 1 2 -
finality
only
applies
institutions,
the
g
the
6 : 3 0
by
will
Board
finality.
The
notice
useful
accompanying
this
notice
may
b:30
be
p.m.
(1)
not
it
Banks
funded
was
to
ACH
In
the
before
in
in
but
not
the
p.m.
Central
local
the
and
could
and
rnay
be
the
time.
Eastern
(2)
be
losses
able
and
parts
to
at
5:00
notify
Pacific
if
time
would
Because
time
time
zones
had
before
if
of
the
an
p.m.
receiving
institution
the
the
may
and
incurred
example,
closed
a
exposes
originated
western
For
were
Mountain
local
or
be
off.
time
had
on
should
unexpectedly
it
day.
by
comments
Specifically,
closed
California
shut
p.m.
provided
down;
p.m.
mid-west
Banks
is
the
receiving
reversals
or
losses
the
best
down
loss.
originated
6:30
is
the
p.m.
this
6:30
requests
of
6:30
without
to
be
computer
were
in
in
can
Board
6:30
of
the
Reserve
located
transactions
Linality
is
whether
after
useful
transactions
late
located
Time,
at
on
late
be
the
Bank's
risk
in
how
notice
addition,
closed
reversed
notice,
notice
institution
and
computer
credit
country
that
give
other
proposed
comment
still
originator
located
institutions
For
such
the
notification
finality
institutions
Pacific
for
some
closed.
are
and
Reserve
an
tne
data,
timely
time
a
if
institution
to
if
on
receiving
given
institution's
incurred
final
comments
connections,
Granting
Reserve
attempt
requests
the
Because
now
receiving
to
be
computer
if
will
become
also
transaction
through
handled
not
requests
Board
institution.
the
Bank
institutions.
p ,m.
The
is
on-line
Reserve
transactions
1ven
to
would
zones
De
set
have
for
13
-
pas sed
before
the
Banks
would
Reserve
tnose
regions
incurred.
California
of
The
not
the
for
and
commenters
would
accept
It
is
institution
Banks
this
will
on
This
transaction
on
the
of
case
the
Federal
Reserve
no
institutions
the
on
the
tne
next
this
data
reversal
opening
for
As
charge
the
the
that
a
private
in
losses
it
risk
ACH
is
of
loss
processor
giving
an
the
depository
that
their
the
also
the
would
night
to
its
following
In
the
at
be
a
mace
For
courier
to
could
on
comments
commenters
give
receive
accounts
the
or
delivered
addition
that
of
day.
cycle.
via
insitution
update
day
opening
transactions
In
reversed.
transactions
delivered
requests
still
institutions
settlement
the
institution.
Reserve
connections
ACH
with
the
being
before
of
are
included
the
are
transactions
close
receiving
originator,
electronic
up
a
before
scheduled
date .
an
proposes
the
such
following
depository
on
any
absorb
accept
provided
with
and
business
the
transactions
whether
receiving
day
Board
transactions
settlement
Board
to
of
reversed
be
closed,
on
a
after
transactions
proposal,
time
that
be
pick
than
would
delivery
latest
will
office,
whose
to
transactions
that
later
Reserve
to
business
or
would
closing
institutions
Banks
mail,
data
reverse
comments
that,
the
individual
Reserve
availaole
of
was
risk.
available
data
business
of
to
and
believe
proposed
make
the
Federal
type
notice
able
requests
appropriate
whether
institution
country
Board
the
be
-
added
that
accounts
protection
the
of
against
Reserve
originating
Banks
potential
losses,
reserve
the
right
institutions
any
time
the
to
during
14
-
tne
settlement
that
day.
where
ACH
to
Tne
there
reverse
ACH
also
or
not
on
tne
Reserve
that
had
it
not
a
for
Banks
be
day.
would
reduce
Banks
the
on
situations
to
This
delivered
day
in
--
The
fund
change
would
to
need
receiving
risk
faced
item
the
the
may
if
the
by
judges
originator's
of
the
i t e m . 5/
does
not
change
to
This
the
ACH
given
opening
settlement
refuse
it
Banks’
credits
after
following
Bank
Reserve
that
reversed
debit
funds
return
been
in
ability
Reserve
indicates
Reserve
a
right
originator's
the
settling
transactions.
business
that
this
settlement
that
currently
sufficient
or
the
transactions
use
an
Transactions
will
given
chargeback
the
Deoit
indicates
oe
credit
items
credit
on
result,
circular
debit
business
a
ACH
ACH
would
probability
As
credit
about
transactions
of
ACH
Banks
concerns
the
institutions.
operating
all
transactions
reduce
receivers
for
Reserve
were
credit
would
day
-
receiver's
It
the
there
account
finality
of
day.
permit
that
for
to
use
may
cover
granted
right
by
of
r e t u r n . 6/
Credit
originating
ACH
suestantially
In
most
uy
receiving
received
da>s
by
cases,
by
Exposure
debit
the
some
tne
following
finality
portion
Uniform
ACH
b/
Ibia, paragraph
risk
granted
of
debit
and
originating
the
The
33.
the
is
by
Letter,
by
institutions
not
the
affected
Federal
transactions
return
institution
settlement
Operating
faced
transactions
institutions,
5_/
--
day.
items
until
Most
paragraph
23.
as
are
may
many
Reserve.
returned
not
as
depository
be
five
15
-
institutions
back
such
collected
financial
have
agreements
Alternatively,
through
the
stability
Because
are
obligated
the
settlement
whether
been
posted
to
be
reversed
local
a
time
receiver
transactions
originators
receiving
i0:00
on
institutions
Reserve
business
business
ACH
be
data
office
later
whether
treat
as
the
tnan
would
their
the
original
transactions
would
be
included
institutions
served
by
couriers
on
or
of
the
day.
the
to
to
advise
of
the
reversed
made
the
day
next
by
day.
available
Reserve
at
the
Postal
ACH
settlement
settlement
the
settlement
being
be
to
a.m.
name
the
the
10:00
and
transactions
close
given
at
the
are
needed
depository
proposes
of
connections
the
final
a
following
for
the
have
result,
credits
Board
on
determine
a
day
fails
following
to
payments
certainty
payments
following
day
no
up
the
business
As
business
to
reversals
funds
transactions
accounts.
following
day
on
transactions
of
able
ail
transactions
whose
close
when
the
reversed,
these
pick
on
charge
about
debit
are
determine
day
electronic
that
the
greater
business
with
ACH
transactions
debit
on
concerned
Banks
paid
holds
to
customer.
transactions
debit
to
by
proposes
the
the
tnose
to
debit
place
are
clearing
ACH
are
them
provide
customers
receiving
morning
institutions
a.m.
to
or
Board
of
of
Transaction
or
To
the
on
they
been
able
the
they
Reserve
have
be
in
day.
of
the
their
corporate
for
reserve
would
originaturs
If
day,
to
institutions,
their
settle
items
Bank
settlement
of
if
institutions
to
debit
Reserve
with
items.
ACH
-
a
to
Banks
Federal
cycle
date.
delivery
Service.
on
the
Reversal
to
- 1 6 -
Debit
Item
Adjustments
receiving
institutions
to
45
about
provides
not
days
notice
debit
for
item
by
If
such
the
the
the
item
currently
is
would
the
failed
the
returns
debit
credit
claim
exposes
the
the
in
part,
called
and
has
the
settle
failed
Reserve
Banks
returning
against
customer.
or
are
item
up
consumer
process
processing,
a
a
whole
Banks
permit
transactions
if
in
Such
to
have
bank's
therefore,
the
failed
bank
debit
item
some
risk
the
basis
Processing
Reserve
Banks
to
obtain
credit
loss .
This
that
an
ACH
customer's
altered
or
prior
intermediary,
Board
Operating
Association,
on
as
to
the
Rules
page
OR
the
basis
the
parties
of
17.
the
authorized
in
a
the
case
forged
In
the
receiving
of
breach
it
Bank,
risk
National
of
is
of
must
a
or
payor
a
forged
prove
must
the
claim
warranty.
any
for
an
knowledge
Rather,
Therefore,
Automated
from
forged
reasonable
loss.
involved.
a
the
bank
without
of
of
case
customer
on
differs
check,
the
believe
Reserve
assume
by
of
not
a
not
risk.
and
does
such
was
checK,
the
to
credit
the
altered
banKS
borne
consumer
case
forgery,
transaction
be
the
bears
an
or
a
obtain
In
bank
The
should
to
check.
alteration
of
transaction
right
indorsement
against
right
debit
(receiving)
y
only
date,
Reserve
obligated
or
the
the
rules
debit
was,
c o n s u m e r .2/
for
would
of
entry
submitted
and
adjustments,
debit
and
NACHA
settlement
of
be
The
consumer
originator
institution
possibly
return
the
adjustments
them.
before
after
that
autnorized
to
--
this
the
Clearing
of
risk
Board
House
17
-
proposes
that
adjustments
originating
the
only
Reserve
when
Board
of
--
Governors
proposals
the
the
credit
preceding
public
at
debit
from
item
the
comment
of
to
ACH
discussion,
on
p.m.
following
transactions:
receivers
6:30
the
the
business
advising
receiving
on-line
connections
endeavoring
telephone
the
of
local
ACH
time
credit
on
the
day;
being reversed
payments;
0
for
treating credits
given
to o r i g i n a t o r s
of A C H
transactions
as
final
payments
at 10:00
a.m.
time on
a a te ;
°
on
finality
settlement
°
recover
finality
transactions
°
credit
institution.
Based
granting
grant
can
requests
concerning
0
they
depository
Proposals
Banks
-
by
to
day
depository
to
Fedwire
the
time
advise
that
following
set
are
settlement
institutions
with
that
payments
are
for
off-line
payments
the
debit
local
finality
of
institutions
being
ACH
by
reversed;
reserving
the
right
to d e b i t
the
reserve/clearing
accounts
of
institutions
originating
ACH
credit
transactions
at
any
time
during
the
settlement
day;
and
Reserve
°
granting
credit
for
debit
item
adjustments
only
when
the
Reserve
Banks
can
recover
c r e d i t f r o m the
originating depository
institution.
By
order
System,
of
the
February
Board
23,
of
Governors
of
the
Federal
1989.
(signed) William W. Wiles
W i l l i a m W. W i l e s
S e c r e t a r y of the Board
@FedFRASER