A Practical Look at the New Nacha Fraud Monitoring Rule

Imagine walking into a bookstore and trying to find where this topic lives. Is it in the finance section, next to books on strategy? Or is it over in true crime, with stories of social engineering and fraud? Or maybe it belongs in technology and cybersecurity, where code meets crime.

The truth is, fraud risk and compliance today touch all those shelves at once. It’s about financial operations, human behavior, and evolving digital threats—all converging in ways that make Credit-Push Fraud one of the fastest-growing financial crimes.

That’s why context matters. The new Nacha Fraud Monitoring Rule isn’t just another compliance update buried deep in a rulebook. It’s a response to shifting fraud patterns that every bank, every business, and every participant in the ACH Network needs to understand—because it sits at the intersection of finance, technology, and trust.

Fraud Is Evolving – and Fast

In financial services, fraud never stands still. Over the past decade, financial institutions invested heavily in reducing debit fraud. Those efforts worked. But as controls tightened, criminals adapted, shifting their focus to a type of fraud that is harder to detect and even harder to recover from: Credit-Push Fraud.

Credit-Push Fraud happens when criminals convince a legitimate account holder to authorize a payment under false pretenses—often through schemes like Business Email Compromise (BEC). The transaction looks legitimate because the account holder “approved” it. By the time the fraud is discovered, the funds are often long gone, having passed through multiple accounts, often across international borders.

For businesses and their banks, these schemes are devastating. Fraudsters target operational vulnerabilities like remote work environments, insufficient dual controls, and employees unfamiliar with intrepid social engineering threats. The result is not just financial loss but also customer distrust, reputational damage, and potential litigation risk for financial institutions.

The Regulatory Response – A Call Upon All Participants

Years ago, recognizing these emerging threats, Nacha took action. In 2022, it called for a New Risk Management Framework to strengthen fraud resilience across the ACH Network. A key principle of that framework was simple but profound: fraud prevention is no longer just the bank’s job—it’s everyone’s job.

The ACH Network is vast, and its participants include banks, Third-Party Senders, Originators (often businesses), and service providers. Fraudsters exploit the weakest link in this chain, and often that weak link is not the bank itself but the business customer, who controls the security and compliance of ACH originations. Nacha’s answer: bring those customers into the fraud prevention effort explicitly.

The New Nacha Fraud Monitoring Rule

The new Fraud Monitoring Rule (Subsection 2.2.4) requires non-consumer Originators and Third-Party Senders to establish and implement risk-based processes and procedures to identify unauthorized or fraudulently induced transactions and review and update those processes at least annually to adapt to evolving fraud risks.

This rule isn’t just regulatory housekeeping. It represents a strategic shift: fraud monitoring is now a formal duty for parties beyond the bank. Every participant has a defined role in spotting and mitigating fraud.

Banks Still Hold the Ball

For banks, particularly Originating Depository Financial Institutions (ODFIs), this doesn’t mean liability is shifting away. In fact, Nacha has made clear that the new rule does not change the ODFI’s fundamental responsibility for transactions originated through its systems. Banks must still ensure their customers—Originators and Third-Party Senders—comply with Nacha’s rules.

The implication is clear: financial institutions need visibility into their customers’ compliance practices and must verify that customers have appropriate fraud monitoring controls in place. Relying solely on contractual agreements or one-time onboarding assessments isn’t enough when fraud patterns evolve so quickly.

Why Now, Who Cares?

The answer is straightforward: because fraud has changed, and the rules must follow. Credit-Push Fraud attacks take advantage of operational gaps at the business customer level. Nacha’s rule closes some of those gaps by ensuring that everyone—banks, customers, and service providers—is actively monitoring for fraud.

For banks, this means moving beyond minimum compliance toward proactive oversight of customer operations. Tools like automated compliance self-assessments, remote customer risk scoring, and self-guided fraud monitoring programs are becoming essential.
This isn’t just about checking a regulatory box. It’s about protecting the integrity of the ACH Network, safeguarding customer trust, and reducing systemic fraud risk.