ACH Compliance an Issue According to Laru Corporation Study

FOLSOM, Calif.--(BUSINESS WIRE)--Laru Corporation, the leading provider of Automated Clearing House (ACH) risk, fraud detection and compliance management software applications, surveyed financial institutions on their ACH compliance processes as both an originating depository financial institution (ODFI) and a receiving depository financial institution (RDFI). The findings of the survey on the origination side showed approximately half of respondents reported manual or no automated system for monitoring ACH transactions originated by their financial institution. According to the Federal Reserve Bank and The Tower Group, Inc., a leading research and advisory firm for the financial industry, ACH transactions will reach 24.5 billion by 2009.

“The results of this survey show that a large number of the responding financial institutions have no automated system to monitor ACH transactions or currently monitor transactions manually for conformance to network rules and contractual terms”

An analysis of the results revealed that 12 percent of respondents reported they do not currently monitor originating ACH transactions; 50 percent monitor transactions daily; 19 percent monitor transactions weekly; and 19 percent monitor transactions monthly. Twenty-three percent said ACH transactions originated within their financial institution had a return rate between two and five percent. Nineteen percent of respondents reported this number was increasing.

On the receiving side, 13 percent of responding financial institutions reported they had more than 2,000 ACH violations hitting their customers annually as a result of fraud or network violations, while 20 percent reported between 500 and 1,000 violations annually. Half of all respondents stated that the number of violations hitting their customers as a result of fraud or network violations had increased from 2006 to 2007. As an RDFI, 35 percent said they did not have an automated system in place or manually track and research ACH violations.

Seventeen financial institutions participated in the survey. Cumulatively, the banks surveyed originate more than 1.3 billion and receive more than 1.4 billion ACH transactions annually.

“The results of this survey show that a large number of the responding financial institutions have no automated system to monitor ACH transactions or currently monitor transactions manually for conformance to network rules and contractual terms,” said William Vaughan, chief executive officer of Laru Corporation. “The increasing number of fraud and network violations for financial institutions serving as RDFIs shows that a significant number of these institutions lack appropriate systems to detect, research and properly resolve ACH transaction issues efficiently. By implementing an automated system that continuously monitors ACH transactions, a financial institution can significantly reduce the risk of fraud and network violations while improving customer service and reducing the overall cost of delivering the service.”

About Laru Corporation

Laru Corporation, headquartered in Folsom, Calif., is the leading provider of ACH risk management and compliance software applications. Laru’s products are used by financial institutions to identify, resolve and prevent ACH fraud and network violations. Laru’s flagship product, ACH Clarity^TM, monitors and manages the risks of originating, receiving, and processing ACH transactions and provides an independent ACH compliance and audit platform in accordance with OCC Bulletin 2006-39. For more information call 888-527-8007 or visit the company’s web site at www.larucorp.com.