We want to help our ACH origination clients remain compliant with the new National Automated Clearing House Association (NACHA) rules that became effective in 2026.
One of the most significant updates is an increased emphasis on fraud prevention through risk-based processes. Businesses originating ACH transactions will be expected to monitor ACH activity more closely in order to identify unusual transactions and take proactive steps to reduce fraud.
NACHA’s emphasis is on moving beyond passive processing to actively evaluating transaction patterns and behaviors. To this end, they have implemented some new rules.
New Requirement: Standardized Company Entry Description
To improve consistency and transparency, NACHA now requires standardized descriptions for certain transactions. One that affects our clients is payroll payment files. All PPD credit entries used for wages, salaries, or similar compensation must use the description “PAYROLL” in the Company Entry Description field. For example, when creating a new payment if you choose Payroll-PPD, PAYROLL will automatically populate in the Company Description field. See example below.
If you use Prearranged deposit-PPD credit entries for wages, salaries, or similar compensation, enter PAYROLL in the Company Description field. See example below.
New Requirement: Strengthening Authorization Practices
Clear, well-documented authorizations are the foundation of compliant ACH activity. Your business must now:
- Maintain written procedures for collecting and updating account information.
- Keep organized records of authorizations for all ACH entries and retain them for at least two years after the authorization is terminated or revoked, or as otherwise required by applicable NACHA rules.
- Monitor for unusual authorization activity that could signal fraud.
Best Practices for Verifying Changes to Account Information
Fraud often occurs during account changes, making the verification of any new information critical. Taking the following steps helps ensure that changes are legitimate and properly authorized:
- Independently confirm any changes to account or routing numbers.
- Use callback procedures with known, verified contact information.
- Avoid reliance on contact details provided in emails or change requests.
- Apply extra confirmation processes to high-dollar or high-risk changes.
- Document all verification steps for audit purposes.
How to Prepare Your Business
Consider taking the following actions to strengthen your fraud controls:
- Review your systems to see if they can flag unusual ACH activity.
- Implement strong internal controls, such as dual control procedures.
- Require additional review for high-risk or high-value transactions.
- Document your processes and train staff on fraud awareness.
- Confirm that your vendors and partners also follow risk-based monitoring practices.
Lake Ridge Bank is here to support you through these changes. If you have questions about your ACH processes or ways we can help you reduce your risk of fraud, please reach out to our Treasury Management team at treasurymanagement@lakeridge.bank or at (608) 310-1240.
