AAP ACH Network Participants and Roles 2 — Questions and Answers
Question 1: What is the primary obligation of an RDFI when it receives an ACH debit entry?
- Post the entry to the Receiver's account unless a valid return reason exists (Correct answer)
- Obtain the Receiver's approval before posting
- Forward the entry to NACHA for approval
- Hold the entry for 5 business days before posting
Correct answer: Post the entry to the Receiver's account unless a valid return reason exists
The RDFI must post ACH entries to the Receiver's account unless it has a valid return reason under the NACHA Operating Rules.
Question 2: Which party in the ACH network bears ultimate responsibility for the actions of a Third-Party Sender?
- NACHA
- The ODFI (Correct answer)
- The ACH Operator
- The Receiver's bank
Correct answer: The ODFI
The ODFI is ultimately responsible for the actions of its Third-Party Senders and must ensure their compliance with NACHA Operating Rules.
Question 3: A Nested Third-Party Sender is defined as:
- A TPS that itself uses another TPS to transmit entries to an ODFI (Correct answer)
- An ODFI that sponsors multiple originators simultaneously
- A direct ACH network member with nested accounts
- A Federal Reserve branch providing sub-processing services
Correct answer: A TPS that itself uses another TPS to transmit entries to an ODFI
A Nested Third-Party Sender is a TPS that contracts with another TPS (rather than directly with an ODFI) to transmit ACH entries, creating a layered origination structure.
Question 4: When a non-participating DFI's customer receives an ACH entry, which entity typically acts as the RDFI?
- The non-participating DFI itself
- A correspondent or gateway institution that processes on behalf of the non-participating DFI (Correct answer)
- The Federal Reserve Bank directly
- NACHA as the network administrator
Correct answer: A correspondent or gateway institution that processes on behalf of the non-participating DFI
Non-participating DFIs do not have direct ACH network access, so a correspondent or gateway institution acts as the RDFI and passes the entry through.
Question 5: Before originating entries for a new Originator, an ODFI is required by NACHA rules to:
- Conduct a risk assessment and due diligence review of the Originator (Correct answer)
- File a report with FinCEN about the new relationship
- Notify the RDFI in advance of the first entry
- Obtain pre-approval from NACHA
Correct answer: Conduct a risk assessment and due diligence review of the Originator
NACHA rules require ODFIs to perform due diligence and a risk assessment of new Originators before transmitting entries on their behalf.
Question 6: An ODFI's warranty to the ACH network when transmitting entries includes:
- That entries comply with NACHA Operating Rules and that the Originator has obtained proper authorization (Correct answer)
- That all entries will settle on the same day
- That entries are guaranteed to be fraud-free
- That the RDFI will post entries within one hour of receipt
Correct answer: That entries comply with NACHA Operating Rules and that the Originator has obtained proper authorization
By transmitting entries, the ODFI warrants that they comply with NACHA Operating Rules and that proper Receiver authorizations have been obtained.
AAP ACH Network Participants and Roles 2
What is the primary obligation of an RDFI when it receives an ACH debit entry?