Purpose

This bulletin presents guidance to national banks for due diligence, underwriting, and monitoring of entities that process payments for telemarketers and other merchant clients. As detailed in several OCC issuances, certain merchants, such as telemarketers, pose a higher risk than other merchants and require additional due diligence and close monitoring. This bulletin supplements, but does not replace, existing guidance related to Automated Clearing House (ACH) risk management, merchant processing, and remotely-created checks (RCCs).

Background

The OCC has seen a variety of relationships between banks and processors in which the processor uses its bank relationship to process payments for merchant clients. Often the processor uses a bank account as the vehicle to conduct such payment processing. For example, a processor may be a bank customer that deposits into its account RCCs generated on behalf of merchant clients. A processor may also act as a third-party sender of ACH transactions, originating debits for its merchant clients through its customer relationship with the bank. In either case, the bank often has no direct customer relationship with the merchant. Risks are heightened when neither the processor nor the bank performs adequate due diligence on the merchants for which they are originating payments.

For the full bulletin visit http://www.occ.treas.gov/ftp/bulletin/2008-12.html