Temporary Suspension of Debits Due to Lack of Response to an ACH Reclamation

4/7/2020 - By Janice Weisz, AAP

Reclamation is a procedure used by the federal government to recover benefit payments made through the Automated Clearing House (ACH) Network to the account of a recipient who died or became legally incapacitated or a beneficiary who died before the date of the payment(s). A Receiving Depository Financial Institution (RDFI) has up to 60 calendar days from the issue date of the reclamation to provide a full and accurate response to the proper government disbursing office. Failure to respond in a timely manner may result in a debit to the RDFI’s Federal Reserve Bank (FRB) account or the account of its correspondent for the total amount of the reclamation.

Under the U.S. Department of the Treasury, the Bureau of the Fiscal Service (Fiscal Service) understands that there are some staffing challenges for financial institutions and at the Fiscal Service due to protocols associated with the Coronavirus outbreak. These challenges may result in the delay of the financial institution to respond and Fiscal Service’s ability to process ACH Reclamations in a timely manner.

As a result of these challenges, until further notice, the Fiscal Service has suspended the process of debiting a RDFI’s FRB master account in cases where the RDFI does not respond to an ACH Reclamation notice within 60 calendar days. Financial institutions should continue to process and respond to reclamation notices during this period in order to avoid unnecessary backlogs.

The Fiscal Service will continue to process agency requests for debits (i.e., 45-day amounts), financial institution debit authorizations, ACH returns as a result of death and checks received from financial institutions for amounts owed due to reclamations.

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About the Author | Janice Weisz, AAP
Janice is a consultant in the Financial Institution Advisory Group at Saltmarsh, Cleaveland & Gund. Janice has been working with financial institutions since 2001 with an emphasis on operations, compliance, audit and internal controls. She currently provides ACH compliance, NACHA compliance, internal audit and other consulting services to the firm’s financial institution industry clients.