AAP Compliance and Audit 1 — Questions and Answers
Question 1: Under NACHA rules, an ODFI's annual risk assessment must include:
- Evaluating the ACH risk of each Originator and Third-Party Sender relationship (Correct answer)
- Submitting a formal risk report to both NACHA and the Federal Reserve
- Conducting individual audits of all consumer Receiver accounts
- Filing a Suspicious Activity Report for each high-risk Originator
Correct answer: Evaluating the ACH risk of each Originator and Third-Party Sender relationship
NACHA requires ODFIs to perform annual risk assessments that evaluate the ACH-related risks posed by each Originator and Third-Party Sender relationship.
Question 2: NACHA's enforcement mechanisms for rules violations include:
- Fines, suspension, or termination of ACH network participation (Correct answer)
- Criminal prosecution through NACHA's in-house legal authority
- Automatic account freezing by the ACH Operator
- Direct Federal Reserve intervention and sanction
Correct answer: Fines, suspension, or termination of ACH network participation
NACHA enforces its rules through a risk management framework that includes financial fines, suspension from the ACH network, and termination of participation rights.
Question 3: The maximum NACHA fine for a willful rules violation is:
- Up to $500,000 per incident (Correct answer)
- $100 per individual entry in violation
- $1,000 per batch transmitted in violation
- $50,000 as a flat fee per audit finding
Correct answer: Up to $500,000 per incident
NACHA can impose fines up to $500,000 per incident for willful violations of the Operating Rules, with lesser amounts for less severe violations.
Question 4: How frequently must ODFIs complete an ACH audit as required by NACHA?
- Annually (at least once per calendar year) (Correct answer)
- Quarterly (every three months)
- Monthly (at least once per month)
- Every two years at minimum
Correct answer: Annually (at least once per calendar year)
NACHA Operating Rules require ODFIs to complete an ACH audit at least once per calendar year to assess compliance with the rules.
Question 5: NACHA Operating Rules require ODFIs to monitor their Originators primarily for which key compliance metric?
- Return rates—specifically the unauthorized debit return rate and the overall debit return rate (Correct answer)
- Average transaction dollar amount relative to industry benchmarks
- Daily entry count compared to the Originator's origination limit
- Consumer complaint ratio reported to the CFPB
Correct answer: Return rates—specifically the unauthorized debit return rate and the overall debit return rate
ODFIs must monitor Originator return rates, because excessive overall or unauthorized return rates indicate compliance problems that require ODFI intervention.
Question 6: The overall debit return rate threshold that triggers NACHA review of an Originator is:
- 15% of debit entries originated (Correct answer)
- 0.5% of debit entries originated
- 3% of debit entries originated
- 25% of debit entries originated
Correct answer: 15% of debit entries originated
An overall debit return rate exceeding 15% triggers NACHA review of the Originator's practices, as this indicates systemic problems with the origination.
AAP Compliance and Audit 1
Under NACHA rules, an ODFI's annual risk assessment must include: