No bank wants to spend money on a new solution—especially in an environment where budgets are tight, headcount is constrained, and every investment must compete with growth initiatives.
That reluctance is understandable.
But as the Nacha Fraud Monitoring Rules move from guidance to enforcement, banks face a hard truth: doing nothing differently is not a neutral decision.
It is a decision to accept a growing—and compounding—risk.
This article explores what happens when banks rely on the status quo: manual questionnaires, limited customer visibility, and (inevitably) a reactive fraud response—after something goes wrong.
The New Reality: Bank Customers Are the Primary Targets of Fraud
Nacha has been explicit about why the new Fraud Monitoring Rules are essential: credit-push fraud is no longer an edge case—it is now the dominant fraud threat to the ACH Network.
That statement fundamentally reframes the risk landscape. Fraud is increasingly originating outside the bank’s perimeter, at customer sites where authorization is obtained, credentials are stored, and access controls vary widely.
Bad actors are arbitraging vulnerabilities by attacking the customers as the gateway to the bank.
That’s why the new Rules require (not just recommend) that banks look more closely at how their customers run their day-to-day operations (“verified by appropriate oversight”).
What Happens If Banks Change Nothing?
Manual questionnaires/surveys will come up short.
Many institutions have historically relied on periodic questionnaires or surveys to assess Originator or Third-Party Sender compliance.
These approaches tend to suffer from the same structural problems:
- Low completion rates
- Inconsistent answers
- Easy to game / minimal revelatory insight
- No standardized scoring or trend analysis
- Limited audit defensibility
- Heavy staff time spent chasing responses, let alone on compiling, analyzing and producing reports and remedial plans
- No tailored insights to help customers remediate gaps
The issue isn’t that questionnaires/surveys exist—it’s that they:
- don’t scale
- don’t produce consistent or often meaningful records
- don’t impactfully sensitive and empower customers to be active participants in fraud prevention (in the way the Rules are now asking banks to do)
When Fraud Happens First—and Questions Come Later
In a recent conversation, a community bank shared with us how they narrowly avoided a $1.6 million loss from a business email compromise (BEC) involving a valued commercial customer.
Unfortunately, stories like this are no longer rare—they’re now part of the day-to-day reality for banks across the U.S.
The payments in that near-miss example were technically authorized, so how could this happen?
The fraud occurred because a key employee of the customer was deceived by a savvy fraudster (human factor risk)—exactly the type of “False Pretenses” scenario Nacha’s new Rules were created to address.
The bank avoided the loss, but the aftermath raised uncomfortable questions:
- What visibility did the bank have into the customer’s actual authorization practices?
- What evidence existed that the customer had been educated or empowered to manage BEC risk?
- What records demonstrated the bank had oversight prior to the event?
Without that evidence and records an examiner might find that the bank is ultimately responsible under the Rules for any resulting loss, regardless of what’s in the origination agreement (under Rules Section 2.1 and the BSA and AML regulations). Near misses are warnings. The next incident may not end the same way.
Examiner Questions Banks Should Expect
The New Rules signal a regulatory (and audit) focus on how banks oversee customers’ compliance/risk management. Once enforcement begins, examiners will not only ask whether banks have oversight—but how banks’ reliance on customer compliance or fraud monitoring is verified and enforced.
Common questions are likely to include:
- How do you know your Originators understand and follow authorization requirements?
- What evidence shows you reviewed customer fraud controls annually?
- How do you identify higher-risk customers (based on operational compliance, not just the traditional factors like return rates) and adjust oversight accordingly?
- What does “appropriate oversight” look like in practice at your bank?
These are not theoretical questions. They ensue from the placement of the New ODFI Rule following Section 2.1 and Nacha’s stated standard for reliance on third-party operational compliance: “verified by appropriate oversight”—language that implies evidence, not intention.
What Happens If A Bank Is Non-Compliant?
A critical misconception persists: that Nacha violations primarily result in modest fines.
In reality, monetary penalties are often the smallest part of the impact.
If a bank is found non-compliant with Nacha Rules—particularly around customer authorization and Fraud Monitoring—the potential consequences include:
1. Regulatory escalation
Nacha Rules intersect with broader regulatory expectations around operational risk, third-party risk management, and safety and soundness. A Nacha compliance failure can quickly expand into broader supervisory scrutiny.
2. Reputational damage
Fraud events tied to weak oversight erode trust with customers, counterparties, and regulators—especially when losses fall on small businesses, nonprofits or municipalities.
3. Litigation risk
Even when banks are not legally at fault, customers harmed by fraud often seek recovery. Banks sometimes absorb losses simply to avoid reputational harm or prolonged disputes.
4. Growth constraints
Regulatory findings can limit:
- new product launches,
- onboarding of higher-risk customers,
- acquisitions or strategic expansion.
In short, a compliance failure can become a growth inhibitor.
The Concept of a “Compliance Deficit”
One of the most dangerous positions a bank can be in by June 2026 enforcement is running what can be described as a compliance deficit.
A compliance deficit occurs when:
- Regulatory expectations/rules have clearly shifted,
- Peer institutions have upgraded their approaches and solutions to comply,
- Regulators expect demonstrable evidence aligning with the new Rules
- But the bank lacks scalable systems, records, and oversight mechanisms.
At that point, catching up is far more expensive than preparing early. A compliance deficit can lead to reactive spending, emergency remediation, and rushed implementations—often under examiner pressure. An examiner’s discovery of a compliance deficit may also entail a finding of a violation of a reporting duty.
What Happens When Fraud Hits?
Many institutions delay investment until something bad happens. That approach is risky for three reasons:
- Fraud impact is massive
A single event can erase years of building healthy cash reserves. - Post-incident scrutiny is harsher
Controls that might have been acceptable before an incident are judged more critically afterward. - Remediation under pressure is inefficient
Emergency fixes cost more, strain staff, and often miss strategic alignment.
“You can control compliance and therefore, to an extent, the resulting costs. Waiting removes that control.”
— Trevor Lain, JD, Founder & CEO, Lexalign
A Necessary Investment at a Critical Moment
No one wants to buy new technology, but here is the 2026 reality:
Fraud has shifted. Regulatory expectations have shifted. And responsibility now explicitly includes educating, sensitizing, and overseeing customers—the very place fraudsters are concentrating their efforts.
Banks that invest now are not just buying compliance. They are:
- protecting deposits,
- preserving customer trust,
- safeguarding growth plans,
- and avoiding compounding risk.
The question is no longer whether banks will need stronger tools to meet requirements under the new Rules.
The question is whether they will implement them before or after something goes wrong.
Doing nothing may feel cheaper today. But under the new Nacha Rules, inaction is far more expensive than having a strong, scalable solution in place on Day 1.
