Navigating Through Nested Third-Party Senders

Many institutions struggle with the challenges associated with managing Third-Party Sender relationships. This challenge tends to compound when the nature of a Third-Party Sender relationship is unknown, including determining who is originating and how far down the chain parties the actual Originator is. In September 2022, the Nacha Rules were updated to address the challenges associated with Nested Third-Party Senders in the ACH network. These changes included a formal definition of Third-Party Sender, a requirement for ACH Origination agreement updates regarding Nested Third-Party Senders, Third-Party Sender obligation and warranties related to Nest Third-Party Senders, and a new Nacha Risk Management portal registration requirement for ODFIs.

In this session, NEACH will explore the impact and implications to various parties related to this change. ODFIs have a unique position with Third-Party Senders because they bear the risk of these relationships and activities happening downstream. Specifically, in this session, we will explore the new definition of a Nest Third-Party Sender and provide related examples, including ACH transaction process flows, to help solidify attendees' understanding of this newly defined role. We will also review the recent rule changes' requirements, warranties, and obligations and explain the implications of these changes to the ODFI and Third-Party Senders. This session will also provide sample approaches for complying with ACH Origination Agreements, including sample agreement language. Finally, this session will discuss ODFI reporting requirements in the Nacha Risk Management Portal.

In this session attendees will:
• Explain the impact of the Nested Third-Party Sender rule changes
• Distinguish between Originator, Third-Party Sender, and Nester Third-Party Sender participants
• Evaluate the organizational impact of these changes on the attendee’s institution