TREASURY MANAGEMENT. User Guide. ACH Services

Transcription

1 TREASURY MANAGEMENT User Guide ACH Services

2

3 Table of Contents Welcome to BBVA Compass ACH Services 2 Contact Information 2 Deadlines 2 Holidays 3 Getting Started 3 Compass e-access 3 Compass e-transmit 3 File Transfer Services 4 Third Party Service Providers 4 Prenotification Entries 4 Prepaid ACH Services 4 ACH Accounts Receivable (ARC) Entries 5 ACH Re-presented Check (RCK) Service Requirements 6 ACH telephone-initiated (TEL) entries 8 ACH Internet-Initiated (WEB) Entries 9 International ACH Transactions (IAT) 11 ACH Originator Tool Kit 13 Frequently Asked Questions of ACH Originators 13 Batching Files 15 File Deletions and Reversals 15 File Deletions 15 Reversing Files 15 Reversing Entries 16 ACH Reversal Request Sheet (Please put on your Company Letterhead) 16 Returns and Notifications of Change 17 ACH Returns 17 ACH Return Codes 17 ACH Automatic Redeposit 19 ACH Notifications of Change (NOC) 19 Notification of Change (NOC) Codes 19 How to Read your Return and NOC Report 20 Sample ACH Return / NOC Report 20 Spotlight on Success 21 Tips to Make the ACH Process a Success 21 TM C rev. 07/15

4 Welcome to BBVA Compass ACH Services Thank you for choosing BBVA Compass as your ACH Service provider. We hope you will find our ACH products and our Business Relationship Services team easy to do business with. We would like to take this opportunity to remind you that, as an ACH Originator, you are bound by the Rules and Regulations as established by the National Automated Clearing House Association (NACHA). We encourage you to visit their web site at There you will find information on how to order a current copy of the ACH Rules, as well as valuable information such as promotional materials and industry news. If there is anything we can do to help make ACH Services a success for your company, please let us know. Contact Information Technical Support for New ACH Users Compass e-access 1 (866) Compass e-transmit 1 (205) File Transfer Services 1 (205) Ongoing Support for Existing ACH Users Once you are an established ACH user, you may contact your local Business Relationship Services area if you have questions or need information about your ACH Services. Alabama 1 (800) x1 Arizona 1 (800) Colorado 1 (866) Florida 1 (800) x1 New Mexico 1 (800) South Texas (except El Paso) 1 (800) El Paso 1 (800) North Texas 1 (866) California 1 (800) Deadlines All ACH files must be received by BBVA Compass no later than 6:00 p.m. CT at least one business day prior to settlement (payment) date. However, to help ensure timely posting by receiving banks, we highly recommend that consumer credit files (i.e. direct deposit files) be submitted to the bank two business days prior to the settlement date. 2

5 Holidays Federal Reserve holidays should be taken into consideration when you are establishing an effective date for your ACH transactions. Should you create a file with an effective date on a Federal Reserve holiday, the settlement date will be changed to the next business day. Listed below are some important things to keep in mind when establishing an effective date for your ACH files: Files should not have an effective date that falls on a Federal Reserve holiday. Files should not be submitted with an effective date that is the same day the file was transmitted. BBVA Compass observes all Federal Reserve holidays. If you require the ACH transactions to settle the day prior to the Federal Reserve holiday, be sure to add an additional day to the file transmission schedule. This will ensure that the Receiver of the funds has use of them during the holiday. Getting Started We are sure you are ready to begin using your new ACH services, and we would like to get you up and running as soon as possible. Listed below are the next steps, which will vary depending on your transmission method. Compass e-access You should receive your Compass e-access welcome kit approximately ten to fifteen days after submission of a request for Compass e-access Online Services and the approval of the Service Instructions. Once you have completed the set up procedures, you can begin working on your ACH templates. The process for establishing the templates is covered in detail in your Compass e-access Corporate User Guide. If you are creating your own NACHA formatted file and plan to use Compass e-access to transmit the file to us via the Pass-Thru function, instructions for doing so are included in the Compass e-access Corporate User Guide. The Pass-Thru function will inform you of any formatting errors you need to correct. Tip: BBVA Compass can only verify the format of your ACH file and not the information contained within the file. Therefore, we highly recommend you create a prenotification file for recurring ACH transactions to help ensure that the information contained within the file is accurate. Please refer to the Prenotification Entries section on the next page for more information. Compass e-transmit Approximately ten to fifteen days after submission of a request for Compass e-transmit Services and the approval of the Service Instructions, you will receive your Compass e-transmit welcome kit. Once you are ready to transmit a test file, contact our Compass e-transmit Specialist at the phone number provided on page 3 of this guide. The specialist will work with you to test connectivity and to accept your first test file. This test file is not processed in our ACH system. It is simply used to verify that your ACH file is in the proper NACHA format. If there are any formatting problems with your file, our NACHA File Specialist will contact you. Once you receive confirmation that your ACH file format is correct, you will be ready to go live with ACH Services. Tip: BBVA Compass can only verify the format of your ACH file and not the information contained within the file. Therefore, we highly recommend you create a prenotification file for recurring ACH transactions to help ensure that the information contained within the file is accurate. Please refer to the Prenotification Entries section on the next page for more information. 3

6 File Transfer Services Your system administrator should receive your File Transfer Services welcome letter with the system User ID approximately ten to fifteen days after submission of a request for File Transfer Services. The system password will also be delivered to your system administrator within the same time frame. Once you are ready to transmit a test file, contact our File Transfer Services Specialist at the number provided on page 3 of this guide. The specialist will work with you to test connectivity and to accept your first test file. This test file is not processed in our ACH system. It is simply used to verify that your ACH file is in the proper NACHA format. If there are any formatting issues with your file, our NACHA File Specialists will contact you. Once you receive confirmation that your ACH file format is correct, you will be ready to go live with ACH Services. Tip: BBVA Compass can only verify the format of the file and not the information contained within the file. Therefore, we highly recommend you create a prenotification file for recurring ACH transactions to help ensure that the information contained within the file is accurate. Please refer to the Prenotification Entries section below for more information. Third Party Service Providers If you are using a vendor to transmit your ACH files to BBVA Compass, now is a good time to check with them to make sure they are ready to go. Your Treasury Management Analyst will inform your vendor when we are ready to accept a file. Prenotification Entries A prenotification (prenote) entry is a zero dollar entry that is used to verify that the information in an ACH entry, such as the Receiver s account number, is correct. Use of the prenote process is optional. However, we highly recommend that you take advantage of this process. It is particularly useful for recurring credit entries to help ensure that the Receiver s account is credited on a timely basis. Incorrect routing number or account number information could delay posting at the Receiving Depository Financial Institution (RDFI). We recommend that you create prenote entries for all new recurring ACH files as well as any new or updated entries in a recurring ACH file. You may send prenotes separately or in a batch of live dollar entries. Please consult your Compass e-access Corporate User Guide for information on originating prenote entries. If you are creating your own NACHA formatted file and would like to originate prenote entries, please use the appropriate transaction code outlined in the NACHA File Format document that we provided as part of your welcome kit. If you decide to create prenote entries, there are certain NACHA rules that you must follow. First, you may not initiate live dollar entries until at least six (6) banking days after the settlement date of the prenote entry. This requirement allows enough time for the RDFI to identify and report any errors. If a prenote entry is incorrect the RDFI will issue a Notification of Change (NOC). You will receive this information on a report entitled Distribution Entries List. This report is sent to you via U.S. mail, or can be received via Compass e-access or fax for a small fee. If you receive a NOC, an associated change code (see page 24 for change code descriptions) will tell you why the RDFI issued the NOC. The Distribution Entries List will provide you with the correct information to be include in subsequent entries. Please see page 25 for detailed information on how to read the Distribution Entries List. The required change must be made within six (6) banking days of receipt of the NOC information or prior to initiating another entry, whichever is later. Prepaid ACH Services Prepaid ACH services allow our business customers to originate ACH credits without an extensive credit review or underwriting process. Examples of credit applications include Direct Deposit of Payroll, Child Support Payments, Corporate Payments and Tax Payments. 4

7 Service Requirements A Customer using Prepaid ACH services is required to have sufficient collected funds in their ACH settlement account prior to transmitting an ACH credit file to BBVA Compass for processing. Collected funds are defined as funds in your ACH settlement account for which BBVA Compass has either received final settlement or has posted a temporary credit or debit in anticipation of final settlement. Collected funds also include funds available from a line of credit or investment account that may be automatically drawn upon and transferred into your ACH settlement account. How it Works If you have more than one account at BBVA Compass, you initially select the account that will be debited to fund your ACH credit files. This account becomes your ACH settlement account. Upon receipt of an ACH credit file, BBVA Compass will verify that sufficient collected funds are available in your ACH settlement account. If sufficient collected funds are available, your ACH settlement account will be debited immediately and your ACH credit file will be processed. If sufficient collected funds are not available, your ACH credit file will not be processed until sufficient collected funds become available. The delay in processing your ACH credit file may result in your recipients (i.e. employees in the case of Direct Deposit of Payroll files) receiving their funds late or not at all. BBVA Compass will continue to verify sufficient collected funds at various times during the day your file is received at the bank. Verification of funds will continue through the settlement date (i.e. payday for Direct Deposit of Payroll files) or until sufficient collected funds become available, whichever is sooner. If sufficient collected funds are still not available by 9 p.m. CT on the settlement date, your ACH credit file will automatically be deleted the morning after the settlement date. Additional Processing Considerations If you are attempting to fund your ACH settlement account, most deposits are not immediately considered collected funds. Check deposits are not fully collected for at least one to two business days, longer in some cases. Incoming wire transfers or incoming ACH credits are usually considered collected upon receipt. Debit entries are not permitted. If you submit debits with your ACH credit file, the entire file will be suspended. If an error is made and it is necessary to delete a credit file, please contact ACH Operations at 1(205) They will assist you with the deletion or reversal of your ACH credit file. If you plan to initiate debit entries on a regular basis, please contact your Treasury Management representative. A more extensive credit review and underwriting process will be performed. If you submit multiple ACH credit files or batches, BBVA Compass may not process them in the order they are received. Therefore, please ensure that sufficient collected funds are available in your ACH settlement account to fund all files or batches submitted. Special Note for Customers Creating Their Own ACH File It is very important that your ACH file is formatted correctly. Prepaid ACH services will debit your account regardless of any formatting errors. However, we cannot send incorrectly formatted files to the Federal Reserve for processing. Should this occur, we will attempt to contact you for written permission to delete the incorrect file and request that you submit a correctly formatted file. All ACH files submitted must be in an unbalanced format. A debit offset to your ACH settlement account should not be included in your ACH credit file. BBVA Compass will automatically debit your ACH settlement account to fund your ACH credit file. ACH Accounts Receivable (ARC) Entries This is a brief overview only of the NACHA rules regarding ARC entries. You and your employees must comply with NACHA rules. For additional information, please refer to Section 14 in the Automated Clearing House Services provisions of your Compass Bank Treasury Management Services Agreement and the most current edition of the ACH Rules published by NACHA. An ARC entry allows you to convert a check received for the payment of goods and services into an ACH debit using information contained in that check. 5

8 ARC services can be used for any check or sharedraft that: Was sent to you through the U.S. mail or delivered to a dropbox for payment of goods and services Contains a pre-printed serial number Is equal to or less than $25,000 Is completed and signed by your customer ARC services cannot be used for: Checks that contain an Auxiliary On-Us field* or are greater than $25,000 Third-party checks Demand drafts and third-party drafts that do not contain the signature of the consumer Credit card checks Obligations of a financial institution (e.g. official bank checks, money orders, etc.) Checks drawn on the U.S. Treasury, a Federal Reserve Bank, or a Federal Home Loan Bank Checks drawn on a state or local government Checks payable in anything other than U.S. currency *The Auxiliary On-Us field is an optional field on a business size (longer than 6 ) check s MICR line (the line of numbers at the bottom of all checks). If a check includes an Auxiliary On-Us field, it will appear in the leftmost position of the MICR line, before the routing number field. Notice to Your Customers You must provide notice about ARC to your customer prior to the receipt of each check that will be used as a source document to originate an ARC debit entry. The notice must be clear and conspicuous, and must state that receipt of your customer s check will serve as authorization for the origination of an ARC debit entry to your customer s account. In most cases, the easiest way to provide notice is on or with each monthly billing statement. Notices may also be displayed on a sign at each drop box location. Under current NACHA rules, you are also required to establish reasonable procedures under which your customers may notify you that their checks are not to be converted to ARC entries. It is recommended that you provide your customers with a telephone number for any inquires with respect to ARC entries. Additional Service Requirements A reading device must be used to capture the MICR line of the check (routing number, account number, check serial number). The dollar amount of the check may be entered manually and must equal the amount of the check. You must retain a copy of the front of the check for two years from the date of the ARC entry. To satisfy requests from your customers banks in case of disputes, we will request a copy of the disputed check from you. Copies must be provided to us as soon as possible, but no later than 5 days after the request has been made. ACH Re-presented Check (RCK) Service Requirements To help ensure that you are informed of and comply with the National Automated Clearing House Association (NACHA) rules regarding RCK entries, we are providing you with a brief overview of these rules. For additional information, please refer to Section VI, item 12 in your Compass Bank Treasury Management Services Agreement and the most current edition of the ACH Rules published by NACHA. 6

9 Eligible Items Returned checks must meet all of the following requirements to be eligible for electronic re-presentment: Checks must be negotiable demand drafts drawn on a bank Checks must contain a pre-printed serial number Checks must be less than $2,500 Checks must have been returned for insufficient or uncollected funds Checks must be less than 180 days old Checks must be drawn on a consumer account Examples of checks that are not eligible for electronic re-presentment include: checks drawn on business accounts, checks drawn on the U.S. Treasury, certain checks drawn on state or local governments, U.S. Postal Service money orders, checks payable in a foreign currency, and third-party checks. Additional Service Requirements As an originator of RCK entries, you must provide notice to your customer prior to receiving the check to which the RCK entry relates. The notice must inform your customer that their check may be collected electronically if it is returned for insufficient or uncollected funds. The notice must clearly and conspicuously state the terms of your returned check policy. It is recommended that notice provided at the point-of-sale be clearly displayed on a sign at the point-of-sale. Notice provided by a billing firm (i.e., utility company or credit card company which issues a bill for payment) should be clearly displayed on or with the monthly billing statement. RCK entries may only be originated for the face amount of the check. Returned check fees may not be added to the amount of an RCK entry. To collect returned check fees via ACH, you must originate a traditional consumer debit entry following the applicable NACHA rules. Specifically, you must first obtain written authorization from your customer. Suggestions include 1) obtaining written authorization from your customers as part of a check writing or check cashing agreement that your customers are required to sign before writing checks or 2) an endorsement stamped on the check that requires your customer s signature. We will be happy to work with you to design an approach that is best for your company while complying with the NACHA rules. You are required to retain a copy of the original returned check (front and back) for 7 years from the settlement date of the RCK entry. To satisfy requests from your customers banks in case of disputes, we will request a copy of the disputed check from you. Copies must be provided to us as soon as possible, but no later than 5 business days after the request has been made. NACHA File Format Requirements If you are using Compass e-access to create your ACH RCK file, please include: The check number in the designated field If you are creating your own NACHA formatted ACH RCK file, please include: The description REDEPCHECK in the Company Entry Description Field of the Batch Header Record The original payee (your company name) on the face of check in the Company Name Field of the Batch Header Record The check number of each item in the Check Serial Number Field of each RCK Entry Detail Record For more information about creating a correctly formatted NACHA file, please refer to the NACHA file format information provided by BBVA Compass or the most current edition of the ACH Rules published by NACHA. 7

10 ACH telephone-initiated (TEL) entries This is a brief overview only of the NACHA rules regarding TEL entries. You and your employees must comply with NACHA rules. For additional information, please refer to Section 15 in the Automated Clearing House Services provisions of your Compass Bank Treasury Management Services Agreement and the most current edition of the ACH Rules published by NACHA. A TEL entry allows you to originate a debit entry to a consumer s account for the payment of goods and services based on oral authorization and banking information obtained from the consumer via the telephone. You must obtain a separate oral authorization from the consumer for each entry to that consumer s account. TEL entries may be used if 1) there is an existing relationship between you and the consumer or 2) the consumer initiates the telephone call. TEL entries may not be used if you initiate the telephone call and have no existing relationship with the consumer. A relationship exists if 1) a written agreement is in place between you and the consumer for the provision of goods or services or 2) the consumer has purchased goods or services from you within the past two years. Authorization Requirements For an oral authorization obtained over the telephone to be valid, the following information must be clearly stated to your customer during the telephone call: The date on or after your customer s account will be debited The amount of the debit entry to your customer s account The customer s name A telephone number answered during normal business hours for customer inquiries The date of your customer s oral authorization A statement that the authorization will be used to originate an ACH debit entry to your customer s account You are required to either tape record the authorization or provide your customer with a written notice containing the above information. You must retain either the original or duplicated tape recording of your customer s oral authorization or a copy of the written notice confirming your customer s oral authorization for two years from the date of the authorization. To satisfy requests from your customers banks in case of disputes, we may request a copy of the recording or written notice from you. The copy must be provided to us as soon as possible, but no later than 5 days after the request has been made. If you choose to provide a written notice, it must be sent prior to the date your customer s account will be debited. Notices may be sent via U.S. mail, fax, other mail delivery methods or electronically via . Please note that state and federal laws may require consumer consent before using electronic notices. A voice response unit (VRU) may be used by your customer to key enter data and to respond to questions, provided that the actual authorization is orally provided by your customer. Additional Service Requirements To help reduce the increased risk associated with verbal authorizations provided over the telephone, NACHA rules require you to verify: The identity of your customer (name, address and telephone number) by confirming pertinent information with that customer. Examples of pertinent information include your customer s account number, past buying history, mother s maiden name or caller ID information. The validity of bank routing numbers obtained from your customers. The TEL solutions BBVA Compass offers will verify this information. 8

11 ACH Internet-Initiated (WEB) Entries This is a brief overview only of the NACHA rules regarding WEB entries. You and your employees must comply with NACHA rules. For additional information, please refer to Section 16 in the Automated Clearing House Services provisions of your Compass Bank Treasury Management Services Agreement and the most current edition of the ACH Rules published by NACHA. A WEB entry may only be used to initiate debit entries to a Consumer Account. The NACHA Operating Rules define a Consumer Account as an account held by a financial institution and established by a natural person primarily for personal, family or household purposes and not for commercial purposes. WEB entries are only appropriate when initiating debit entries that have been authorized by the Receiver via the Internet. An authorization that was obtained from the Receiver in person, through the mail or over the telephone may NOT be initiated as a WEB transaction. The WEB SEC code cannot be used to initiate credit entries except for reversals of WEB debit entries. WEB entries are subject to the requirements of the NACHA Operating Rules, the Electronic Fund Transfer Act, and Regulation E, as promulgated by the Federal Reserve Board. Authorization Requirements NACHA Operating Rules provide the mechanism for the return of unauthorized debit entries from the Receiving Depository Financial Institution (RDFI) to the Originating Depository Financial Institution (ODFI) for sixty (60) days from the settlement date of the entry. The RDFI may return a debit as unauthorized if it has a Written Statement Under Penalty of Perjury from its customers stating that the debit is unauthorized. Originator Responsibility For all WEB Entries, an Originator is required to ensure that certain aspects of the transaction have been addressed in a commercially reasonable manner. Specifically the Originator is obligated to: Verify the identity of the Receiver, utilizing commercially reasonable methods of authentication Employ a commercially reasonable fraudulent transaction detection system to screen each entry A commercially reasonable system, technology, practice or process is one that corresponds to frequently accepted practices among commonly situated Originators that conduct similar types of transactions. Using a commercially reasonable standard requires an Originator to assess the circumstances surrounding the payment, the industry as a whole, and to draw a conclusion about what constitutes a commercially reasonable level of behavior (whether it is for security, authentication or other aspect of the rules). Single-Entry and Recurring Payments The WEB SEC Code applies to both Single-Entry and recurring payments authorized via the Internet. However, there has been a distinction drawn between entries that are defined as Single-Entry Internet transactions and recurring transactions. Single-Entry payments are defined as one-time transfers of funds initiated by an Originator in accordance with the Receiver s authorization for a single ACH debit to the Receiver s account. A recurring payment is (1) a payment, based on a consumer s authorization, that has been set up to occur at regular intervals without any further action on the part of the consumer or (2) multiple entries, based on an authorization provided by the consumer establishing a relationship with the Originator for a specific type of activity, that are initiated individually upon the specific instructions of the consumer.

12 ACH Data Security Requirements For all ACH Transactions that involve the exchange or transmission of banking information via an Unsecured Electronic Network, the NACHA Operating Rules require that the banking information be either (1) encrypted using a commercially reasonable security technology that, at a minimum, is equivalent to 128-bit RC4 encryption technology, or (2) transmitted via a secure session that utilizes a commercially reasonable security technology that provides a level of security that, at a minimum, is equivalent to 128-bit RC4 encryption technology. These encryption requirements must be employed prior to the key-entry and through the transmission of any banking information exchanged over such an Unsecured Electronic Network between: an Originator and a Receiver an Originator and an ODFI an ODFI and an ACH Operator an ACH Operator and an RDFI an Originator, ODFI, RDFI, or ACH Operator and a Third Party Service Provider Verification of Identity of Originators/Third Party Senders The NACHA Operating Rules also require ODFIs to utilize commercially reasonable methods to establish the identity of each Originator or Third-Party Sender that uses an Unsecured Electronic Network, such as the Internet, to enter into a contractual relationship with the ODFI for the origination of ACH transactions. Authorization Requirements Originators of WEB entries must obtain the consumer s authorization prior to initiating a debit entry under this application. The authorization must conform to the requirements of the NACHA Operating Rules, which require that the authorization Be displayed on a computer screen or other visual display for Customer s review Was either signed or similarly authenticated by the Customer Was accompanied by instructions prompting Customer to print the authorization and retain a copy For recurring WEB Entries only, was accompanied by a description of the method by which the Customer may revoke the authorization Security of Internet Session As with all ACH entries involving the exchange or transmission of any banking information over an Unsecured Electronic Network, Originators of WEB entries are required to (1) encrypt the Receiver s banking information using a commercially reasonable security technology that, at a minimum, is equivalent to 128-bit RC4 encryption technology, or (2) transmit the Receiver s banking information via a secure session utilizing a commercially reasonable security technology that provides a level of security that, at a minimum, is equivalent to 128-bit RC4 encryption technology. The use of such encryption technology must, at a minimum, be employed prior to the key-entry of the Receiver s banking information and through the transmission of the data to the Originator. Currently, 128-bit RC4 encryption technology is the standard for financial transactions and is considered commercially reasonable. If technology advancements drive the commercially reasonable standard to change, Originators should comply with the new standard. 10

13 Annual Security Audits The NACHA Operating Rules for WEB transactions require Originators to conduct an audit at least once a year to ensure that Receiver s financial information is protected by security practices and procedures that ensure that the financial information the Originator obtains from consumers is protected by security practices that include adequate levels of: Physical security to protect against theft, tampering, or damage Personnel and access controls to protect against unauthorized access and use Network security to ensure secure capture, storage and distribution of financial information Requirements for your Annual Security Audit will be mailed to you by the end of the first quarter to be completed by September 31 and mailed to our Risk Department each year. You will receive these requirements separately from this ACH User Guide. International ACH Transactions (IAT) In 2009, the National Automated Clearing House Association (NACHA) amended their Operating Rules and introduced the International ACH Transaction (IAT). The rule amendments require all payments funded internationally or sent to another country using the ACH network be identified as IATs, and that all IATs include additional information as defined by the Bank Secrecy Act s (BSA) Travel Rule. Prior to the rule, there were internationally funded payments originated into the U.S. ACH network that could not be identified as international transactions. The Office of Foreign Assets Control (OFAC) requested that NACHA modify the Operating Rules to adequately identify international transactions, their senders, and their recipients, which allows banks to review IATs for OFAC compliance. What is an IAT? An IAT is an ACH entry that is part of a payment transaction involving a financial agency s office that is not located in the territorial jurisdiction of the United States. Specifically, an office of a financial agency is involved in the payment transaction if it: holds an account that is credited or debited as part of a payment transaction; or receives funds directly from a person/organization or makes payment directly to a person/organization as part of a payment transaction; or serves as an intermediary in the settlement of any part of a payment transaction. A payment transaction: is an instruction of a sender to a bank to pay or to obtain payment of an amount of money that is to be paid to or obtained from a receiver, and any and all settlements, accounting entries, or disbursements that are necessary or appropriate to carry out the instruction. Does the IAT rule impact my business? The following are some questions that you need to consider in determining if the IAT rule change impacts your company: Is your company a subsidiary of a multi-national company? Does your company have foreign subsidiaries? Does your company buy or sell to organizations or individuals outside the territorial jurisdiction of the United States? Are your ACH transactions or ACH file directly funded (whether via an ACH transaction or any other transaction, such as a wire transfer) from a source outside the territorial jurisdiction of United States? Does your company send credits (i.e. payroll, pension, vendor or other benefit payments) or debits via the ACH Network to individuals or organizations that have permanent addresses outside the territorial jurisdiction of the United States? 11

14 How do I determine if any of my ACH transactions should be IATs? There are three things to consider when determining if an ACH transaction should be formatted as an IAT: Payment Transaction A payment instruction to create ACH transactions (or a file already created) plus explicit funding for the ACH file. The funding and data do not necessarily have to be included in the same file. Financial Agency Funding for the transaction is transmitted to or received from a financial agency located outside the territorial jurisdiction of the United States. U.S. ACH Network Any part of the transaction is processed through the U.S. ACH Network. For additional guidance, please review the IAT Scenarios fact sheet at extranet/index.cfm. If asked to login, please use the following: Username: treasury Password: management Additional Information Required with IATs The IAT format includes additional information required by the BSA s Travel Rule as follows: Name and physical address of the originator Name and physical address of the receiver Account number of the receiver Identity of the receiver s bank Foreign correspondent bank name, bank ID number and bank branch country code Please ensure that you have the additional mandatory information available if IAT is required. For more information, please refer to the ACH NACHA File Format Origination User Guide or the most current edition of the ACH Rules published by NACHA. Additional Considerations If any of your current ACH transactions fall within the definition of an IAT, please be aware that BBVA Compass may, from time to time, need to temporarily suspend processing of an IAT for greater scrutiny or verification in accordance with OFAC requirements. This may affect settlement and/or availability of an IAT to your receiver. For additional information regarding IAT transactions, please refer to the IAT Corporate Tool Kit published by NACHA at We strongly encourage you to review the IAT Corporate Tool Kit to assist you in evaluating the applicability of the IAT code to your ACH transactions. You will be responsible for determining if your transactions meet the rule requirements; we cannot do it for you, but we are happy to help. Please be aware that you are subject to U.S. law, including OFAC-enforced sanctions, when initiating ACH entries. 12

15 ACH Originator Tool Kit Frequently Asked Questions of ACH Originators Listed below are some of the most frequently asked questions from our ACH Originators. If you have any questions that are not answered here, please contact your local Business Relationship Services Department. What is the deadline for sending in my ACH file? BBVA Compass must receive all ACH files by 6:00 p.m. CT. Any file received after that time will not be processed until the next business day. How often does BBVA Compass send ACH files to the Federal Reserve Bank (ACH Operator) for processing? We pass ACH files to the Federal Reserve twice during each business day: 1100 window 11:00 a.m. CT 1800 window 6:00 p.m. CT Note: These times are followed without exception. We cannot hold a window open in order to receive your file. How far in advance do I need to send in my files? All ACH files must be received by BBVA Compass no later than 6:00 p.m. CT at least one (1) business day prior to the settlement (payment) date. However, to help ensure timely posting by receiving banks, we highly recommend that consumer credit files (i.e. Direct Deposit files) be submitted to us two (2) business days prior to the settlement date. How far in advance can I send in my files? BBVA Compass ACH Department can warehouse your ACH files for up to seven (7) calendar days. Do I have to send in each ACH file separately, or can I send in multiple batches at the same time? This will depend on how your company is set up in our ACH system. Please refer to the section entitled Batching Files for more information. How do I cancel a file I transmitted? Contact the appropriate Technical Support area as listed on page 3 or the ACH Department at (205) The procedures you must follow depend on when the file was transmitted to us, the time of day you contact us and the file settlement date. You will be instructed on the procedures to follow based on your individual situation. How do I reverse an entry from a file I transmitted? Contact the ACH Department at (205) to speak to an ACH Representative. Complete the ACH Reversal Request Sheet on your company s letterhead (see page 20 and fax it to (205) Originate an entry for the correct amount, if necessary, and notify the Receiver of the reversal. 13

16 How do I know that all my ACH items posted correctly? On the settlement date, your account will be credited or debited for the total dollar amount of the ACH file. If an ACH entry did not post to a Receiver s account, you will receive a Distribution Entries List. This report lists any ACH entry that has been returned, and the reason for that return. You will receive this report each day you have a return item. The timing of this report is dependent on the Receiving Depository Financial Institution (RDFI), but we will send it to you the same day it is made available to us. You will receive this report automatically via U.S. mail, but can receive it via Compass e-access or fax for a small fee. Tip: Customers who wish to process ACH returns in an automated fashion may use Compass e-transmit or File Transfer Services to download a NACHA formatted file containing detailed information on returned ACH items. What is the process for establishing ACH services for another one of my accounts? Contact your Treasury Management Representative or Relationship Manager and let them know you wish to add an account to ACH services. Your request may require additional approval. Your Relationship Manager and Treasury Management Representative will assist you through the set up process. What is the process for establishing another type of ACH service for my company? (Example currently using Cash Concentration, want to add Direct Deposit of Payroll). Contact your Treasury Management Representative or Relationship Manager and let them know you wish to add ACH services to your account. Your request may require additional approval. Your Relationship Manager and Treasury Management Representative will assist you through the set up process. What does balanced and unbalanced file mean? A balanced file contains an offsetting entry. For example, if you were transmitting a payroll file for a total payroll amount of $100,000, the file would contain an offsetting debit to your payroll account for $100,000. An unbalanced file does not contain the offsetting entry. As additional security for your company, BBVA Compass accepts unbalanced files only. We establish the offset account on our ACH system so that the correct account is automatically credited/debited. If you are using Compass e-access to create your ACH file, your file will already be in an unbalanced format. What is a Return Item and a Notification of Change? Both Return Items and Notifications of Change (NOC) are included on the Distribution Entries List. A Return Item is an item that was processed by BBVA Compass, but was not posted by the RDFI. This may be because the account number was incorrect, the account is closed, or there are insufficient funds to honor the request. An NOC is an item created by the RDFI to notify you that there is outdated or incorrect information contained in your ACH file. The NOC will indicate the information that needs to be corrected in your file. What is a Distribution Entries List? The Distribution Entries List is simply a report listing all your Returns and Notifications of Change. Please see the section entitled How to Read Your Return & NOC Report on page 25 for more information. What is an ACH Exposure Limit? The ACH Exposure Limit is the total allowable dollar amount of your company s ACH files either settling, awaiting settlement in our ACH warehouse, or being presented for processing. The ACH Exposure Limit is determined during the ACH customer approval process. 14

17 How will I know what my ACH Exposure Limit is? You will receive a letter in your welcome kit stating your ACH Exposure Limit. What happens if I exceed my ACH Exposure Limit? Be sure to keep your ACH Exposure Limit in mind when transmitting ACH files. Remember that your ACH Exposure Limit is compared to the total of all your ACH files settling, awaiting settlement in our ACH warehouse, or being presented for processing. ACH files are included in this limit comparison until the day after settlement. If you exceed this limit, your ACH files will not be processed. In the event that this occurs, your Relationship Manager or banking officer will contact you. How do I have my entry ACH Exposure Limit raised either temporarily or permanently? Contact your Relationship Manager or banking officer in advance to let them know that your ACH Exposure Limit needs to be increased. They will work with you to establish the appropriate limit. Batching Files NACHA rules allow you to transmit multiple batches in one ACH file. This is particularly beneficial if your company processes ACH files for various purposes or for multiple entities. Batching simply means you send in multiple ACH batches in one file transmission. For example, you may include your Direct Deposit of Payroll for Location One, Location Two, and Location Three in one file. In addition to keeping your files more organized, you will be able to have the total amount of each batch settle (post) to a different account. If you would like to use the batching feature, please let your Treasury Management Representative know so that we can set you up appropriately on our ACH system. This will help us ensure your ACH files are processed correctly. File Deletions and Reversals If you need to cancel an ACH file, please contact the appropriate Technical Support area as listed on page 3 or our ACH Department at (205) The file may be deleted or a reversing file may be initiated, depending on when the file was transmitted and the time you call. File Deletions A file deletion removes the ACH file from BBVA Compass systems before the file is processed and sent to the Federal Reserve Bank. This can usually be accomplished if you contact us prior to our processing the file during normal processing windows. The procedures you will be instructed to follow depend on the file transmission method you use. Tip: Only an entire ACH file can be deleted. Individual entries may be reversed (please see the Reversing Entries section below), but not be deleted. Reversing Files If we are unable to delete your file, it is because it has already been processed. If your company mistakenly initiated a duplicate file or a file in which each entry contains erroneous data, our ACH Department may initiate a reversing file on your company s behalf. Each reversing file must be initiated in such time as to be transmitted or made available to the RDFI(s) within five (5) banking days after the Settlement Date of the duplicate or erroneous file. If necessary, a reversing file to correct a file containing erroneous data must be accompanied by a correcting file that contains the correct information. An ACH Representative will assist you with this process. 15

18 Reversing Entries If an individual entry on your file is erroneous, you may contact our ACH Department at (205) and request an entry reversal. Per NACHA rules, an erroneous entry: 1. Is a duplicate previously initiated by the Originator 2. Orders payment to or from a Receiver not intended to be credited or debited by the Originator 3. Orders payment in a dollar amount different than was intended by the Originator You must also notify the Receiver of the reversing entry and the reason for the reversing entry no later than the Settlement Date of the reversing entry. Please complete an ACH Reversal Request Sheet (see sample below) for each reversing entry on your company s letterhead and fax to our ACH Department at (205) Please call the ACH Department at (205) to verify receipt of the fax. If reversing an erroneous credit entry, your company s account will be credited within one (1) to three (3) business days for the reversal. However, the RDFI may return the reversing entry for insufficient funds or other reasons. BBVA Compass will try to collect funds from the RDFI, but we cannot guarantee it. If a reversal for a credit entry is returned, your account will be debited. Then it is your company s responsibility to collect funds from the Receiver. ACH Reversal Request Sheet (Please put on your Company Letterhead) In compliance with NACHA article 7.2, INSERT COMPANY NAME will indemnify BBVA Compass against any and all claims, demands, loss liability or expense including attorney s fees and cost resulting directly from compliance with the following request. Details are as follows: Reverse Original Credit Debit Compass PaySource Date Item Effective: Transit Routing Number of Item: Account Number of Item: Amount of Item: Name of Person or Company: Credit/Debit the following BBVA Compass Reverse Original Credit Date Item Effective: Transit Routing Number of Item: Account Number of Item: Amount of Item: Name of Person or Company: Compass PaySource* After you have completed this form, please contact the ACH Department at (205) to verify that it has been received. Fax form to (205)

19 Returns and Notifications of Change ACH Returns The ACH process provides the Receiver and/or the RDFI with the ability to reject an ACH entry for specific reasons. This allows the various participants in the ACH system to exercise their respective rights to not accept an ACH entry and to return it to the Originator via the ACH network. An ACH item can be returned for a variety of reasons, and sometimes a combination of reasons. Listed below are some of the most common ACH Return Reason Codes, along with a definition and a description. The codes will be displayed on your ACH Return Report called the Distribution Entries List. For a more extensive list of ACH Return Reason Codes, please consult your NACHA rulebook. Tip: Use our Automatic Redeposit service to process your insufficient funds (NSF) returns. See ACH Automatic Redeposit section for more details. ACH Return Codes Field Field Name Usage R01 Insufficient Funds The available and/or cash reserve balance in the account was not sufficient to cover the dollar value of the debit entry. You may reinitiate this entry no more than two (2) times following the return of the original entry. R02 Account Closed A previously active account was closed by the Receiver or RDFI. R03 No Account / Unable to Locate Account The account number did not correspond to the individual identified in the entry or the account number designated is not an open account. R04 Invalid Account The account number structure was not valid. The entry may have Number failed the check digit validation or may have contained an incorrect number of digits. R05 Unauthorized Debit to Consumer Account Using Corporate SEC Code A Corporate debit entry was transmitted to a Consumer account of the Receiver and was not authorized by the Receiver. R06 Returned per ODFI s Request BBVA Compass requested that the RDFI return the entry. R07 Authorization Revoked by Customer The Receiver revoked the authorization previously provided to you for this particular transaction. You may not reinitiate this entry unless you obtain subsequent authorization from the Receiver. R08 Payment Stopped The Receiver placed a stop payment on this debit entry. You may not reinitiate this entry unless you obtain subsequent authorization from the Receiver. R09 Uncollected Funds The dollar value of transactions in the process of collection in the account brought the available and/or cash reserve balance below the dollar value of the debit entry. You may reinitiate this entry no more than two (2) times following the return of the original entry. 17

20 Field Field Name Usage R10 Customer Advises Not Authorized, Notice Not Provided, Improper Source Document, or Amount of Entry Not Accurately Obtained from Source Document The RDFI was notified by the Receiver that your company was not authorized to debit the Receiver s account. You may not reinitiate this entry unless you obtain subsequent authorization from the Receiver. For ARC entries, the required notice was not given, the source document used for the debit entry is improper or the amount was not accurately obtained from the source document. R12 Account Sold to Another DFI The Receiver s account was sold to another financial institution. R13 RDFI Not Qualified to Participate The RDFI is not qualified to participate in the ACH or the routing number is invalid. R14 Representative Payee Deceased or Unable to Continue in that Capacity The representative payee (a person or institution authorized to accept entries on behalf of another person) is deceased or unable to continue in that capacity. R15 Beneficiary or Account Holder Deceased The beneficiary or account holder is deceased. R16 Account Frozen The funds in the account are unavailable due to specific action taken by the RDFI or legal action. R17 File Record Edit Criteria The RDFI could not process the entry due to an error in a particular field(s). This field(s) is identified in the addenda record of the return. R18 Improper Effective Entry Date The effective entry date for a credit entry is more than two (2) banking days after processing. R19 Amount Field Error The amount field 1) is non-numeric, 2) is not zero in a prenotification entry, or 3) is zero in a live entry. R20 Non-Transaction Account Transactions on the account are prohibited or limited. R23 Credit Entry Refused by Receiver The Receiver refused to accept your credit entry. R24 Duplicate Entry The RDFI received what appeared to be a duplicate entry. R25 Addenda Error The addenda record contained an error. R26 Mandatory Field Error Your entry was missing information in a mandatory field. R27 Trace Number Error The trace number was missing or incorrect. R28 Routing Number Check Digit Error The check digit for a routing number was invalid. R29 Corporate Customer Advises Not Authorized The RDFI was notified by a non-consumer Receiver that your entry was not authorized by the Receiver. R31 Permissible Return Entry BBVA Compass notified the RDFI that we agreed to accept a CCD or CTX return entry in accordance with specific NACHA rules. R32 RDFI Non-Settlement The RDFI is not able to settle the entry. R34 Limited Participation DFI The RDFI s participation in the ACH has been limited by a federal or state supervisor. R35 Return of Improper Debit Entry ACH debit entries are not permitted to loan accounts. R36 Return of Improper Credit Entry ACH credit entries are not permitted for use with the ARC and TEL standard entry class codes. RCK entries must be limited to debits, with the exception of reversals to correct erroneous entries. R37 Source Document Presented for Payment The source document to which an ARC entry relates was presented for payment. 18

21 Field Field Name Usage R38 Stop Payment on Source Document A stop payment order was placed on the source document to which an ARC entry relates. R39 Improper Source Document The RDFI determines that the source document used for an ARC entry is improper. R50 State Law Affecting RCK Acceptance The RDFI is located in a state that has certain laws which, in effect, prohibit RCK entries in some or all cases. R51 Item is Ineligible, Notice Not Provided, Signature Not Genuine, Item Altered, or Amount of Entry Not Accurately Obtained from Item The RCK entry was ineligible for conversion to an ACH debit entry in accordance with NACHA rules. R52 Stop Payment on Item A stop payment order was placed on the item to which the RCK entry relates. R53 Item and ACH Entry Presented for Payment The item to which the RCK entry relates was presented for payment. ACH Automatic Redeposit BBVA Compass also offers the Automatic Redeposit service to help process your insufficient funds (NSF) returns. With this service, any ACH returns received with a R01 reason code can automatically be resubmitted on your behalf. The following options can be established for this process: 1. Minimum and/or maximum dollar threshold for qualifying items 2. Number of times to redeposit returned items (maximum of 2) 3. Number of days between receipt of return and redeposit of item (between 1 and 10 days) ACH Notifications of Change (NOC) A Notification of Change, or NOC, tells you that the information contained within an ACH or prenotification entry is either inaccurate or that something has changed requiring the entry be updated. A NOC also tells you the information that needs to be changed. You must make these changes within six (6) business days, or prior to re-initiating the ACH entry, whichever is later. NOCs are created by the RDFI and sent back via BBVA Compass to your company. This allows the RDFI to send correcting payment information to you without having to return the payment. Listed below are some of the most common ACH NOC Codes along with their definition and a description. The codes will be displayed on your ACH NOC Report called the Distribution Entries List. Also included in the ACH NOC Report is the correct information that you will need in order to update the ACH entry. For a more extensive list of ACH NOC Codes, please consult your NACHA rulebook. Notification of Change (NOC) Codes Field Field Name Usage C01 Incorrect DFI Account Number The Receiver s account number is incorrect. C02 Incorrect Routing Number The routing number contained in an entry is incorrect. C03 Incorrect Routing Number and Incorrect Account Number C04 Incorrect Individual Name / Receiving Company Name Both the routing number and account number are incorrect. The name on the Receiver s account differs from the name listed in the entry. 19

22 Field Field Name Usage C05 Incorrect Transaction Code Each ACH entry has a transaction code that identifies whether the entry should be posted to a checking or savings account. This entry contains an incorrect transaction code. C06 Incorrect DFI Account Number and Both the account number and transaction code are incorrect. Incorrect Transaction Code C07 Incorrect Routing Number, Incorrect DFI Account Number, and Incorrect The routing number, account number and transaction code are incorrect. Transaction Code C09 Incorrect Individual Identification Number The individual s identification number within the company is incorrect. C13 Addenda Format Error The addenda record contains a formatting error. How to Read your Return and NOC Report Your Return and NOC items will be sent to you in a report entitled Distribution Entries List. This report will be sent via U.S. mail, or can be received via Compass e-access or fax for a small fee. We recommend you purchase the Compass e-access or fax report, especially if you are initiating ACH debit entries. This will help expedite return item notification, as well as provide the information needed to make changes to your ACH files in a timely manner. Please refer to the sample report below for information on how to read your company s report. Sample ACH Return / NOC Report This field is the return or NOC code. An R indicates this item is a return and has not been processed. A C indicates this item has been processed, but you need to update this item in your ACH file to ensure accurate processing in the future. For more information, please refer to code descriptions on pages 21 through 24. Note: You are required to make changes specified in a NOC within six (6) banking days or prior to the initiation of the next ACH entry, whichever is later. This is the dollar amount of the item. If the item is being returned, there will be a dollar amount present. If the item is a NOC, this field will be zero. This is the employee or customer identification number assigned by your company. This is your employee s or customer s name. This field is a brief description of the return or NOC. For more detailed information, please refer to the code descriptions on pages 21 through 24. This is the total amount debited or credited to your BBVA Compass account. This is the correct information to use in your next file. It is provided by the RDFI. 20