Strengthening ACH Fraud Monitoring: What Originators Need to Know

Fraud targeting ACH payments continues to rise across the country. Criminals are using simple social engineering tactics to trick employees into changing payment instructions or initiating fraudulent transactions. In response, Nacha, the governing body for ACH transactions has updated ACH monitoring requirements to reduce successful fraud attempts and help organizations better identify unusual activity before funds leave the account.

While these changes may feel procedural, their purpose is clear: establish strong monitoring practices that make atypical activity easier to spot and stop.

Below is a straightforward overview of what the requirement means and how ACH Originators can meet it effectively.

Why Monitoring Matters

The monitoring requirement is intended to:

• Reduce the incidence of successful ACH fraud
• Establish a baseline of normal activity so irregular transactions stand out
• Encourage layered controls that make fraud more difficult to execute

A fraudster doesn’t need to hack a system if they can persuade an employee to send funds willingly. That is why even simple controls, when consistently applied, can be highly effective.

What the Requirement Means for Originators

Organizations must implement risk-based controls, processes and procedures that are appropriate for their size and operational complexity. These controls should reasonably identify ACH entries initiated due to fraud.

Controls may be developed internally or implemented through third-party providers. The key is not complexity but consistency and coverage. A layered approach offers the strongest protection.

Practical Controls to Consider

The following safeguards, when used together, create meaningful defense against ACH fraud:

Dual Controls
Requiring two individuals to approve transactions significantly reduces risk. A fraudster may deceive one employee, but deceiving two independent reviewers is far more difficult. Many financial institutions offer or require dual control for corporate ACH clients.

Account Validation and Verification Tools
Account validation confirms that an account is open at the receiving financial institution. More advanced ownership verification tools may provide additional data such as name, address or other identifying information. These tools are often provided by third-party vendors and can help prevent payments from being sent to fraudulent or altered accounts.

Multi-Factor Authentication
Multi-factor authentication strengthens system access by requiring a second credential beyond a password. This may include a physical token, biometric input or operator approval. Password-only protection is no longer sufficient. Physical tokens or biometric factors are generally more secure than codes sent by text or email, as fraudsters have developed ways to intercept those communications.

Out-of-Band Authentication
Any request to change payment instructions should be verified using a separate communication channel. For example, if a vendor calls to request updated account information, confirm the change by contacting that vendor using trusted contact details already on file. Never rely solely on the contact information provided in the request.

Routine Monitoring and Exception Reporting
Daily reconciliation and review are critical. Reports should flag transactions to new relationships, payments to new accounts for existing vendors and activity that falls outside normal patterns. Identifying these changes quickly allows organizations to verify legitimacy before loss occurs.

User Access Reviews
Regularly review system access rights. Remove access promptly for employees who change roles or leave the organization. Many fraud events involve compromised or outdated credentials.

Secure Systems and Software Maintenance
Maintain firewalls and current antivirus protection. Ensure all systems and applications are updated with vendor-supplied security patches. Weak system hygiene creates unnecessary vulnerability.

Building a Culture of Verification

The most effective fraud controls are often straightforward. Confirming changes. Requiring dual approval. Reviewing daily reports. The challenge is not understanding the controls but applying them consistently.

Monitoring should not be treated as a one-time project. It is an ongoing discipline that evolves as fraud tactics change. Establishing clear internal procedures and reinforcing them with training strengthens your organization’s ability to detect suspicious activity early.

Moving Forward

These monitoring requirements are designed to protect Originators and the broader payments system. Implementing layered, risk-based controls helps ensure that payments are intentional, authorized, and accurate.

If you have questions about strengthening your ACH processes or would like to review available treasury management tools, your treasury advisor can help evaluate options that align with your organization’s size and risk profile.

Proactive fraud prevention protects more than accounts. It protects relationships, reputation, and operational stability.