On June 25,2001 the ACH Settlement Day Finality policy will become effective. This change will make credit for ACH credit originations final when posted to receiving financial institution accounts at 8:30 a.m. ET on settlement date. The present policy gives the Federal Reserve the right to reverse settlement until 8:30 a.m. ET on the business day following the settlement date.

The Federal Reserve will implement the same risk control measures for ACH transactions that are used by the Fedwire and Net Settlement services. This policy change affects financial institutions whose accounts are monitored in real-time and will require pre-funding for any forward ACH credit transactions. Due to the pre-funding requirement, sufficient funds must be available in the financial institutions account at the time ACH batches containing forward credit items are processed. If there are insufficient funds, the batch will reject and a notice will be sent to the ACH sending point and to the monitored Settlement Depository Financial Institution. It will be necessary for the batch to be resubmitted once sufficient funds are available.

It is important to note that most accounts are not monitored in real-time. For accounts that are not monitored in real-time, ACH credit originations will process as they do today. The publication The ACH Settlement Day Finality Guide may have already been sent to your financial institution. If you haven't received it you may want to contact your local Federal Reserve Bank for a copy.

This policy change does not have an effect on your ACH software, but it may remove a barrier to doing ACH origination for some of your customers. Let them know that finality of originated ACH credit transactions will now happen on and not the day after settlement day!