Effective November 4, 2013, the Federal Reserve Banks are amending Operating Circular 4, Automated Clearing House Items.
Key changes made by this amendment include the following:
This amendment incorporates a number of other, less significant changes. The definitive text of revised Operating Circular 4 is posted on FRBservices.org.
- Indemnification language throughout the operating circular has been standardized.
- Paragraph 3.6 was revised to make clear that a sending bank designates an entity as its agent for sending items to a Reserve Bank rather than a sending point (sending point refers to a device, not an entity). Conforming changes were made to paragraph 7.4 in relation to the designation of an entity as agent for receiving items from a Reserve Bank.
- Certain changes were made to reflect the expansion of the FedACH® SameDay Service, which now offers same-day settlement of domestic credit and debit items for both corporate and consumer payments. Specifically, paragraphs 2.1(q), 3.4(b), and 14.3, as well as paragraph 5.1 of Appendix B, were revised.
- Appendix A (ACH Security Procedures)
- Paragraph 2.4 was revised to delete references to the FedLine® DOS access solution, which is no longer offered.
- Appendix B (ACH Items Time Schedule)
- Paragraphs 1.3 and 5.2 were revised to reflect the decommissioning of the FedPhone® access solution.
- As mentioned above, paragraph 5.1 was revised in connection with the expansion of the FedACH SameDay Service. The FedACH SameDay Service now includes all Standard Entry Class codes, with the exception of International ACH Transaction (IAT), Check Truncation Entry (TRC), and Check Truncation Entries Exchange (TRX).
- Appendix F (FedACH® Information Services)
- Paragraph 1 has been revised to clarify which services are included in the suite of FedACH Information Services and which terms and conditions apply to each service.
- Former paragraph 1.2 has been moved to paragraph 3.3 and expanded to cover settlement of billing charges for FedACH Information Services.
- Paragraph 2.1 now provides a definition of customer, which applies across all FedACH Information Services. Consequently, the definition of customer formerly appearing in Appendix F1 has been deleted.
- Paragraph 2.2 defines the term nonpayment file, which refers to an electronic file containing ACH transaction-related information that is sent to or from the Reserve Banks for informational purposes only, thereby distinguishing such a file from one that contains ACH items for clearing and settlement.
- Paragraph 2.3 defines the term information point, which is a device designated or used by a bank to send or receive nonpayment files, much as the sending point or receiving point is the device from which or to which payment files are directed.
- The definition of service participation point has been moved to new paragraph 2.4 from paragraph 4.1 to consolidate all the definitions in Appendix F.
- New paragraph 3.4 provides that banks that use FedACH Information Services thereby agree to the terms of Operating Circulars 1 and 5.
- The substance of former paragraph 3, which described the FedACH Information File Service, has been moved to newly created Appendix F3 (FedACH® Information File Service) and revised as described in greater detail below.
- New paragraph 5 governs many of the aspects of sending and receiving nonpayment files, including designating an information point and information point agent.
- Appendix F1 (FedPayments® Reporter Service)
- The title of this appendix and the reference to FedEDI® Plus in paragraph 1.1 were revised to reflect the change in the name of this service to FedPayments Reporter from FedEDI Plus. Paragraph 1.1 was further revised to align the service description more closely with the output the service generates.
- Paragraphs 2.2 and 3.2 were revised to make clearer that reports generated by the service may contain information from both payment and nonpayment files.
- Paragraph 4 has been reorganized. It is now less prescriptive about how customers request scheduled reports. New paragraph 4.2 provides that the Reserve Banks may require that a nonpayment file identify whether the customer sending the file was the sending bank or the receiving bank for the ACH items contained in that file.
- Appendix F2 (RDFI Alert Service)
- Paragraph 1.1 was revised to give a receiving bank the option of allowing the Reserve Bank to select the criteria for triggering RDFI alerts.
- Appendix F3 (FedACH® Information File Service)
- As mentioned above, the terms specific to the FedACH Information File Service, formerly in paragraph 3 of Appendix F, have been moved to this new appendix. This was done to help distinguish it as a separate service from the general terms in Appendix F that apply across all FedACH Information Services. The new appendix uses the newly defined terms nonpayment file and information point. Paragraph 1.3 specifies how and where the FedACH Information File may be sent.
- Appendix G (Cross-Border Items)
- Paragraph 2 has been revised to expand the warranties a Reserve Bank acting as a gateway operator for outbound cross-border items gives.
- Paragraph 3 has been revised to modify the warranties a Reserve Bank acting as a gateway operator for inbound cross-border items gives. Specifically, such a Reserve Bank will no longer warrant that the item is in accordance with an authorization of the receiver but will instead warrant that the item is received from the foreign gateway operator.
- Paragraph 4 has been revised to provide that a claim for breach of warranty under Appendix G brought against a Reserve Bank acting as a gateway operator must be initiated within one year from the date of the transaction or occurrence that gave rise to the claim.
- Paragraph 5 has been revised to clarify sending bank and receiving bank risks and responsibilities. Among other things, paragraph 5(d) makes clear that a sending bank bears all risk associated with the return of a cross-border item, including any fees charged for processing or returning items. Paragraph 5(e) makes clear that a sending bank bears all risk associated with the misuse of information provided by the Reserve Banks or others in connection with the processing and settlement of cross-border items. Importantly, paragraph 5(f) narrows to debit items only the warranty regarding receiver authorization given by a sending bank when it sends a cross-border item. Paragraph 5(i) reserves the right of the Reserve Banks to identify additional sending bank and receiving bank risks and responsibilities in the FedGlobal® ACH Service Origination Manual.
Your continued use of Federal Reserve Bank services on or after November 4, 2013, constitutes agreement to the new terms of the operating circular.
See the link below on the Federal Reserve Bank Services website for the official version of the amended operating circular. To request a paper copy of any operating circular, contact your Customer Contact Center.
“FedACH,” “FedLine,” “FedPhone,” “FedPayments,” “FedEDI,” and “FedGlobal” are registered service marks of the Federal Reserve Banks. A complete list of marks owned by the Federal Reserve Banks is available at FRBservices.org.