TO: ALL TENNESSEE STATE CHARTERED BANKS
SUBJECT: ACH Transactions
DATE: October 1, 2001
The Department of Financial Institutions has become aware that some financial
institutions are taking excessive risk regarding ACH transactions.
If your institution processes ACH transactions for telemarketers or internet
based sites, you should very carefully review your contract with both the
processing company and the originators. You should further have CURRENT
financial information on BOTH the originators and processors.
Appropriate reserves should be maintained, under your control, and the contract
should specify daily transaction limits. Board of Directors approved policies
regarding all aspects of ACH transactions should be in place and available for
examiners. Proper controls and regular monitoring of these transactions is
essential.
We urge you to proceed with caution and insure that your level of risk is
appropriate for your institution and your Board of Directors as well. Be certain
that you comply with established NACHA rules.
If you have any questions or comments, please contact Assistant Commissioner
Derek Carrier at 615-741-2236.
.
Fred R. Lawson
Commissioner
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