New Nacha Rules Drive Banks Toward Real-Time Fraud Detection

The March Nacha deadline that has just passed, and the June deadline that follows, are spurring banks to replace static fraud controls with continuous monitoring tied to how ACH transactions actually move through the system.

Periodic review is becoming an always-on function that requires upgrades to data flows, identity checks and internal coordination across payments-focused risk and onboarding systems.

Fraud Is Moving Faster Than Controls

Moving well beyond the confines of isolated unauthorized debits, fraudsters now strive to exploit weaknesses across identity monitoring and payment execution. PYMNTS Intelligence in collaboration with Trulioo has documented the extent to which financial services firms depend on digital channels, with 76% generating at least three-quarters of their revenue digitally. That concentration increases exposure to synthetic identities, to account takeover and impersonation schemes.

The same research shows that identity failures are not marginal. Revenue losses tied to breakdowns in know your customer (KYC) and know your business (KYB) average 3%, totaling nearly $34 billion across the industry. Synthetic identity fraud and account takeover are among the most frequently cited threats, alongside business email compromise and payroll impersonation.

What the Nacha Rules Actually Require

The rule changes are part of a broader risk management package aimed at reducing successful fraud attempts and improving recovery rates. The core requirement is that institutions must establish “risk-based processes and procedures reasonably intended to identify ACH entries initiated due to fraud.”

This is a material expansion, as monitoring now extends across both credits and debits, reflecting how fraud has moved into areas pervasive across payments types and use cases.

Implementation is phased. The March 20 deadline applied to large originators, third-party senders and receiving institutions with significant ACH volume. A second phase, effective June 19, extends the requirements to all remaining participants.

The rules also require standardized company entry descriptions, including “payroll” for wage credits and “purchase” for eCommerce debits, so that institutions can identify and monitor transactions by purpose.

Where Monitoring Now Happens

Monitoring thus begins before transactions are initiated, through stronger validation of account details, and continues after transactions are received, through ongoing review of account activity.

Originating institutions must assess whether transactions align with expected behavior. Receiving institutions must evaluate incoming credits using account profiles, transaction history and anomaly detection. The rules explicitly allow institutions to calibrate monitoring based on risk, including transaction velocity, account characteristics and behavioral patterns.

That flexibility comes with responsibility. Banks must demonstrate that their monitoring is active and proportionate to risk.

The data from PYMNTS Intelligence and Trulioo indicates that many institutions are not yet aligned with that pivot. Nearly 75% report inconsistent identity verification results, and more than half say existing processes introduce friction without improving outcomes. These findings point to fragmented systems where onboarding, fraud and payments operate independently.

Compliance Cost or Operating Model Shift

The practical question for banks is whether these rules are treated as an added obligation or as a trigger for redesign.

Institutions that approach the changes as compliance work will add layers to existing systems. That approach raises costs and often increases false positives, slowing onboarding and payments without materially improving fraud detection.

A different approach is emerging among banks that treat account validation and fraud monitoring as a shared service. In that model, the same verification processes support ACH, real-time payments and other account-to-account flows. Data collected during onboarding informs transaction monitoring. Signals from payments feed back into risk scoring.

This structure allows banks to move faster while maintaining control. It supports real-time verification during onboarding, reduces duplication across systems and improves detection by connecting data points that would otherwise remain isolated.

The Nacha deadlines do not prescribe that architecture, but they might be seen to point in that direction. Fraud monitoring is rapidly and more concretely becoming part of how accounts are opened, how payments are processed and how risk is assessed across the lifecycle of a transaction.

For banks, there are some practical considerations: Treat the rules as a checklist, and costs rise. Treat them as a foundation, and the same controls that satisfy compliance can support faster payments, alongside cleaner onboarding and, critically, more durable fraud defenses.