1.0  COURSE OVERVIEW

This course will introduce the learner to the use and purpose of the Automated Clearinghouse (ACH). Additionally, the course will discuss the particular roles and duties of participants and users inside the ACH system. Upon completion of this course, the learner will have a solid understanding of Bank Secrecy Act (BSA) requirements, Risk management and International ACH Transactions (IAT).

Automated Clearing House (ACH) is a network of financial institutions that transmits electronic debits and credits Transactions include payroll, consumer bills, tax payments and refunds and many more payment services. ACH is a cost effective and timely way to move money.

2.0  WHAT IS ACH?

The ACH Network is a group of financial institutions that process electronic payments, or credits and debits, through their computer systems. ACH stands for Automated Clearing House. It is a network that allows financial institutions to move money between accounts and banks, as well as make payments to creditors.

Think of it like an interbank network where all financial institutions are connected together through ACH technology so they can send money from one institution to another, with or without the customer’s knowledge.

The ACH Network is governed by the NACHA Operating Rules and three main organizations:

• The Electronic Payments Association (NACHA ), which maintains the operating rules and governs membership
• The Electronic Transactions Association (ETA), which represents electronic payment service providers
• Reserve Banks (RBs), which are central banks around the world.

A typical transaction is when you see an option on your bank’s website for “ACH transfer” or “electronic funds transfer” (EFT). This means that you’re using ACH technology to move funds from one account—such as your checking account—to another—like your savings account—or even another institution.

For example, if you want to send money from one bank to another bank, that transaction will be processed through the ACH Network. This can be done electronically or by paper check

3.0  WHY IS ACH COMPLIANCE IMPORTANT?

ACH compliance is essential to company success because it protects a business from legal repercussions of using the ACH network without permission. It also shields you and your customers from fraudulent activity.

ACH compliance is important because it ensures that your company is not violating the privacy of its customers. For example, if a consumer does not want their personal information shared with third parties for marketing purposes, then their wishes should be respected by any organization handling their payment card information through ACH transactions.

ACH compliance is critical to your business because it helps protect you from liability. If you do not follow the rules of ACH, then you may be held responsible for any fraudulent transactions that occur through your company. You could also be charged with negligence or willful misconduct, which could result in significant fines and penalties.

4.0  COURSE LEARNING OBJECTIVES

By taking this course, the user will learn to:

• Understand what the Automated Clearing House (ACH) Network is
• Identify the participants in ACH transaction processing
• Explain the flow of an ACH Entry
• Understand the basic responsibilities of the ACH participants
• Identify the participants of a wire transfer
• Explain the flow of a wire transfer
• Understand the basics of the wire transfer regulations

5.0  COURSE AUDIENCE

This training course was designed but not limited to:

• Central bank back-office employees.
• Software tester or developer
• pre-sales consultant,
• business analyst who are working in banking domain/payments or wants to work in banking domain/payments.
• Anyone who wants to learn about ACH payments

6.0  COURSE OUTLINE

Each module focuses on a different topic such as:

Module 1: Introduction to the Automated Clearing House (ACH) system

This topic will explain the use and purpose of the Automated Clearing House (ACH), which has allowed companies to transfer a wide variety of funds safely, dependably, and conveniently for many years, and will provide information on electronic funds transfers, Federal Reserve Wire Transfers, and more

Module 2: History and how it works today.

During the 1970’s, a committee was formed in the United States to increase the amount of paperless entries in the banking system. This was done since the volume of transactions was increasing manifold and hence more and more paper backed entries meant a higher administrative cost had to be borne. This committee came up with the idea of an automated system. This became the ACH and the first ACH payment was made in 1970. The payment format was created by North America Clearing House Association (NACHA). This is the reason that the format which is used to transfer payments between banks is called the NACHA format.

Module 3: The basics of the wire transfer regulations

This topic will familiarize the learner with Bank Secrecy Act (BSA) requirements of the Automated Clearing House (ACH) and all U.S. financial institutions in terms of maintaining specific records and reporting specific transactions in an effort to minimize money laundering and terrorist financing.

Module 4: Understanding of the main differences between Automated Clearing House (ACH) transactions (such as direct deposit payouts), check payments and other types of payments such as wire transfers.

Module 5: The structure of the ACH network

• Introduction

The Automated Clearing House network, also known as ACH, is a channel run by the National Automated Clearing House Association (NACHA), which transfers funds electronically from one place to another. The NACHA operates to facilitate the growth of electronic payments for payroll, direct deposit, consumer bills, tax payments, and more.

ACH transactions share similarities with paper-based checks; however, the primary difference is that the payment is completed digitally. Therefore, they are often referred to as:

• Electronic funds transfers (EFTs)
• eChecks
  • How the ACH Network Operates

The ACH Network serves an array of financial institutions with a total value of more than $40 trillion per year through electronic transactions. The ACH Network acts as a channel that helps individuals and institutions transfer money from one bank account to another; the form of payment can include direct payments or deposits for government, consumer, or business-to-business purposes.

For a transaction to occur, an entity must first make a direct deposit or payment using the ACH Network. The entity can be an institution, individual, or government. The bank that completes the transaction takes the money, along with transactions made by others, packages them, and sends the funds at scheduled times throughout the day to the Federal Reserve or a clearinghouse.

The Federal Reserve or clearinghouse sorts through the batch and ensures the banks are authorized and can complete the transaction made by the intended recipient. Then, the recipient’s bank account receives the funds made by the sender.

For example, with ACH payments, entities can complete the following online:

• Customers pay a service provider
• The employer deposits money to employee’s checking account
• Businesses pay reoccurring funds to suppliers for materials
• Transferring funds from one bank account to another

• How to Complete ACH Payments

To transfer money from one party to another using the ACH method, the sender needs the bank account information of the receiver. Thus, they need the following details to set up a direct deposit:

• Name of the bank that the receiver uses
• Type of bank account (checking or savings)
• Bank’s ABA routing number
• Recipient’s account number

Module 6: Why mandate/DDA is required for ACH debit Payment

• Importance of ACH debit mandate/DDA

Module 7: roles and duties of participants and users inside the Automated Clearing House (ACH) system,

This topic will discuss the particular roles and duties of participants and users inside the Automated Clearing House (ACH) system, such as originators, receivers, ODFIs, RDFIs, and more.

1. Originator:An originator is the party which initiates the ACH transaction. It need not be a payer always. In some cases, transactions are originated by payers whereas in other cases, they are originated by payees. In order to initiate the transaction, the originator has to first receive the authorization from the recipient.
2. Originating Depository Financial Institution:The originator cannot directly enter the ACH network. This is because only financial institutions are allowed to enter the network. Therefore, the originator has to employ the services of a financial institution. This is called the originating depository financial institution. The originator sends a message to the institution which then begins the process.
3. The ACH Operator:The ACH operator is an electronic payment network which helps transmit payments to the correct beneficiary. In the United States, this role is played by the Federal Reserve which is also the central bank of the nation.
4. Recipient Depository Financial Institution:Just like the originator, the receiver also has to deploy the services of a financial institution since the ACH network is exclusive and individuals or non-financial organizations are not allowed to access the network.
5. Recipient:Finally, the recipient is the party which receives the ACH transaction. The entire process begins only after authorization from the recipient. Hence, it would be fair to say that the ACH transaction begins and ends with the recipient.

Module 8: How transactions are processed

This topic will explain International ACH Transactions (IAT), how they are identified and formatted, how a financial institution is involved in one, and other information.

The ACH system is extremely flexible since it includes almost all payments. This means that debit as well as credit transactions are included in the ACH system. For instance, ACH is used for paying payroll and corporate dividends which are credit transactions. At the same time, it is also used to receive payments for insurance, mortgage etc. which are debit transactions. ACH is also commonly used by companies to make loan payments and even pay federal and state taxes.

Also, there are no restrictions on the amount that can be transferred via the ACH system. This means that large dollar as well as small dollar transactions can be routed via ACH. Similarly, there is no restriction on the type of account which can be used in an ACH transaction. ACH transactions can be posted to savings, checking or even a loan account. Corporations, private individuals or even governments can be parties to an ACH transaction. Also, the ACH system also offers the users flexibility to make a single payment or recurring payments. The ACH format has various predefined codes which are used at predefined places in the format. These codes make the format flexible i.e., the same format can be used for a wide variety of payments.

• What is a Wire Transfer?
• The flow of an ACH Entry
• ACH Transaction Examples & Uses
• ACH Transaction Types & Triggers
• International ACH Transactions (IATs)

Module 9: Non-ACH Knowledge Basel 3

• Correspondent Banking Model
• Cheque Truncation System (CTS) Overview
• Credit Unions Vs Banks

Module 10: ACH Security and Risk Management Issues

This topic will explore how increases in activity and the potential for over-automation result in fewer opportunities for reviews of transactions, translating into higher degrees of risk for financial institutions.

7.0  CERTIFICATION

By the successful completion of your course, you will get a hard copy certificate. Our courses are fully with updated industry knowledge and skills that aim at making you an expert in the field. The hard copy of the certificate is also available and can be sent to your address.

8.0  COURSE METHODOLOGY

The course uses a mix of interactive techniques, such as brief presentations by the consultant, group exercises case studies and using Microsoft office tool to apply knowledge acquired throughout the course followed by participants’ presentations of the results.

9.0  COURSE STRUCTURE

The course duration is 5 full days.

• The course is presented in the form of a power point presentation
• The course includes a Q &A session and some evaluation quizzes

For more information, please contact:

PIERRE DUPLIS BRENNER

The Admission Director

AFRICA INSTITUTE FOR CAPACITY DEVELOPMENT (AICD)

HEAD OFFICE:

21 Detroit Plaza |Pretoria Road|Kempton Park|

Gauteng. SOUTH AFRICA

Telephone : +27 733797377

Whatsapp Number : +27 733797377

Email:info@aicdtraining.com

https://aicdtraining.com/

OUR SERVICES:

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IN PARTNERSHIP WITH:

SADC Institute of Commerce and Industrial Practice
Gauteng. SOUTH AFRICA