ABA Letter to NACHA re: Third-Party Sender Roles and Responsibilities

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 Request for Comment on Third-Party Sender Roles and Responsibilities issued on May 21, 2021. The American Bankers Association1 appreciates Nacha’s efforts to improve the ACH experience and clarifying the roles of Third-Party Senders will benefit all of the participants in the network.

This Request for Comment addresses two aspects of Third-Party Sender (TPS) activity within the ACH Network. The first proposal clarifies the definition of a “Nested Third-Party Sender” (Nested TPS) and updates requirements for these relationships. The second proposal contains specific requirements related to Risk Assessment requirements for TPSs and Nested TPSs.

Proposal 1-Third-Party Senders and Nested Third-Party Senders

• Define “Nested Third-Party Sender” as a TPS that has an agreement with another TPS to act on behalf of the Originator, and does not have a direct agreement with the Originating Depository Financial Institution (ODFI).
  
• ACH Origination Agreements must address Nested TPSs
  
  • ODFI Origination Agreements must state whether Nested TPSs are allowed and require that the TPS have an ACH Origination Agreement with the Nested TPS.
    
  • The ACH Origination Agreement are updated as needed on a going-forward basis.
    
• Other TPS obligations and warranties must reflect any Nested TPS relationships.
  
• ODFIs must identify all TPS’s that allow Nested TPS in Nacha’s Risk Management Portal.
  

The ABA supports all of the recommended changes in Proposal 1. It is important to know all of the participants in the ACH Network and to have all of the participants operate under a clear set of guidelines. These changes achieve that goal without imposing any undue burden on ODFIs, TSPs, or Nested TSPs.

Proposal 2-Third-Party Sender Risk Assessments

• Clarifies that a TPS or Nested TPS must conduct a Risk Assessment.
  
  • Implement a risk management program based on the Risk Assessment.
    
  • Each party must conduct their own assessment examining categories of risk including, but not limited to:
    
    • Operational risk
      
    • Return risk
      
    • Credit risk
      
    • Fraud risk
      
    • Compliance risk
      
    • Reputational risk
      

ABA supports all of the recommended changes outlined in Proposal 2. We believe that Nacha is taking the correct approach in not prescribing the exact topics and methods for the TPS Risk Assessment. TPSs should refer to Nacha’s ODFI Risk Management Requirements or to guidance provided by banking regulators such as the Federal Deposit Insurance Corporation (FDIC) or the Office of the Comptroller of the Currency (OCC).

ABA supports the proposed effective date of June 30, 2022 with a six month grace period ending on December 31, 2022 to be reasonable.

ABA would like to thank NACHA for the opportunity of responding to the Request for Comment on Third-Party Sender Roles and Responsibilities. This proposal achieves the crucial goal of identifying the parties playing these roles and then clearly expressing the risk assessment requirements they must meet. This reduces risk in the entire ACH Network. If you have any questions about these comments, please contact the undersigned at (202) 663-5147.

Sincerely,

Stephen K. Kenneally
Senior Vice President, Payments