ODFIOriginating Depository Financial Institution (banking)
ODFIOhio Division of Financial Institutions
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Linked2Pay, an award-winning banking and payments technology provider, has launched a white label KYC service for ODFIs to automate payments underwriting, onboarding and management, the company said.
For the banks (ODFIs) and their partners (TPPPs), the Linked2Pay white label KYC service greatly reduces the burden by eliminating the duplication of data requests that only serve to frustrate partners and clients during the initial and ongoing KYC process.
Prior to this amendment, courts consistently found that an ODFI is required to indemnify a Receiving Depository Financial Institution ("RDFI") from any claim resulting even remotely from a violation of the warranty provisions.
This Note analyzes the scope of an ODFI's liability in instances where a claim results from an ACH entry made through a Nested-ThirdParty Sender.
"Recognizing that fraudsters need help in accessing the payment system, over the last several years regulators have held that payment processors and ODFIs are responsible for managing legal and reputational risk by closely monitoring the activities of their clients," the groups added.
Under the NACHA rules, if a consumer disputes an ACH transaction within 60 days of the settlement date, the receiving depository financial institution must recredit the consumer and may return the transaction to the ODFI. (31) Even though Regulation E and NACHA rules start the clock at different times (the statement transmittal date versus the settlement date), both indicate that the consumer will not be liable for an unauthorized transaction if that consumer disputes the transaction within a reasonable time frame, according to the experts we interviewed for this article.
For example, a financial institution, as an ODFI, may translate proprietary files from an Originator into ACH and X12 formats, or it may actually create the entries and remittance data if the Originator desires an outsourced payables solution.
That is Originators (or their agents--like the ODFI) would create ACH payment instruction(s) in a CCD+ or CTX entry, as well as the accompanying remittance data, and then pass this file to the ODFI for processing.
However, as you may recall, the total exposure to the ODFI is the amount of the entire ACH credit file, not just the individual transactions.
On the other hand, with ACH origination, the company must have a standing agreement with its ODFI. Participants in the ACH payment system can reduce fraud risk through sound personnel practices; good physical security for computer, communications and ACH operations areas; effective data security; and operational controls.
Basically, that is the purpose of the ODFI. The ODFI is the guarantor of the integrity of the EFT transaction.
Lori Frank, President of Argos Risk, explains how Argos Risk Online works: “Our technology allows ODFIs to enter basic information on their Third-Party Senders and their originating customers such as the company's name, website address, and mailing address.