Exposure Limits – A Simplistic Approach to Setting and Managing
Duration: 60 Minutes
Exposure Limits are not just a good idea, it is a requirement of the NACHA Operating Rules and something regulators verify and do their system checks to be sure they are in place for each type of payment being sent, across multiple payment channels. Other electronic payments include person-to-person, account-to-account, electronic cash, and electronic benefit transfers.
Mobile Financial Services-MFS (the products and services that a financial institution provides to its customers through mobile devices, such as Remote/Mobile Deposit Capture); the risk for financial services continue to apply to MFS, the risk management strategies may differ from those currently used for traditional delivery channels. When it comes to technology-related risks, management should identify, measure, mitigate, and monitor the risks involved and be familiar with technologies that enable MFS.
Objectives of the Presentation
Why Should you Attend
- Tips for the ODFI to manage its credit exposures
- Guidance for the ODFI to establish policies, procedures, and limits that acknowledge the risks certain businesses and customers bring to an ACH operation
- Identifying the difference between low and higher risk businesses
- Analysis of the financial institution's policies to ensure they clearly state the types of businesses and customers that are acceptable and best practices to meet the institution's standard credit review and approval process
- Describe the due diligence process for the ODFI and its originating customers and the nature of their business
- Defining the process for pre-funding or reserve arrangements that may be necessary to help control risk
The NACHA Operating Rules, in Article 2 identifies the importance of setting Exposure Limits. These limits should be appropriate for the risks of each customer and the use of either pre-funding arrangements or having reserves in place can be effective in controlling potential losses. This session will identify the approach for setting exposure limits, handling over-limit exceptions, monitoring and reporting when necessary, plus ensuring exposure limit settings are within the requirements set forth by the network rules and any regulatory guidance.
Discussion on the structure behind setting exposure limits for these other payments channels such as person-to-person and account-to-account transfers.
Who will Benefit
- Outline the ongoing process for the ODFI to monitor the creditworthiness of its customers and reporting requirements
- Suggest ways to establish and periodically review their ACH exposure limits
- List the “how-to’s” for an ODFI to implement procedures to monitor ACH entries relative to the originator's exposure limit across multiple settlement dates
- ACH Operations
- Compliance Officer
- Payments Officer
- Personal Banker