Treasury may hold financial institutions liable government ACH loses
AML AND COMPLIANCE NEWS |
The Department of Treasury has announced that the Bureau of Fiscal Service (Fiscal Service) will begin holding financial institutions liable for providing incorrect automated clearing house (ACH) enrollment information to a federal agency that results in an erroneous or fraudulent payment and a subsequent loss to the government.
Liability may arise if Fiscal Service determines that a recipient's ACH payment was misdirected because an institution submitted incorrect banking information as part of an enrollment or because of a fraudulent enrollment. In either case, a Notice of Direct Debit (Fraudulent Payment Enrollment) will be submitted to the Originating Depository Financial Institution (ODFI). The notice will provide specifics about the misdirected payments and will outline the ODFI's liability. The ODFI has 30 days to return the full amount to Fiscal Service.
Details on the process are available in the Green Book section on the Reclamation Procedures for Erroneous Enrollments.