Earlier it was the check fraud, but now it is the Automated Clearing House (ACH) fraud that is giving sleepless nights to Banks and financial institutions. It is a growing threat to the industries. Majority of the ACH fraud were concerned with session hijacking and account takeover, international transactions, and B2C insider fraud.
1. ACH kiting
Some possible means to lessen ACH fraud includes doing a thorough study. For instance, before associating with any external vendor, perform a detailed audit to establish the third party conformance. A vendor may lack the skill in combating ACH fraud. A few third party vendors are smart in managing their own business but may not have the skill or resources to deal with the security aspects connected with ACH transactions.
2. Proper Training
Institutions can fight ACH fraud through right training using effective and proven technology safeguards. Initiating wire transfer payments using dual control and implementing proven and effective technology safeguards could also be effective.
3. Dual control
One long-standing best practice is to always commence wire transfer payments with dual control, in which one person initiates the transfer while another approves it. While this may not be feasible for an institution with limited resources, it is important for mitigating risks associated with transactions with immediate finality.