Wrestling with Third-Party Senders with Guests Dennis Walker and Stephen Dillon

Wrestling Payments Podcast: Season 1 - Episode 14

Episode Summary

In the latest episode of Wrestling Payments, host Joe Casali and guests Dennis Walker and Stephen Dillon engage in a candid conversation about the complex world of third-party sender relationships in the realm of banking and ACH payments. Drawing from their extensive experience in the industry, Dennis and Stephen share valuable insights and practical wisdom that can help financial institutions navigate this intricate landscape effectively.

The discussion kicks off with an exploration of the key factors that define third-party sender relationships. Dennis and Stephen highlight that understanding and educating the entire workforce within a financial institution is paramount. They stress the importance of being proactive in risk management, recognizing red flags, and implementing preventive measures to maintain the integrity of ACH transactions.

Throughout the conversation, they emphasize the significance of regular annual reviews and check-ins with customers, especially the larger ones. These reviews serve as a crucial opportunity to assess any material changes in a customer's business, their sophistication level, and their evolving risk profile. By staying engaged and informed, financial institutions can adapt their risk management strategies to meet the evolving needs of their customers effectively.

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Guest-at-a-Glance

💡 Name: Stephen Dillon, APRP, AAP, CTP and Dennis Walker, CIA, CISA, CRCM, CFSA, CRMA

💡 What they do: Stephen: Vice President

💡 Company: Stephen: Eastern Bank

💡 Noteworthy: Stephen Dillon boasts a career in banking and treasury services, with a keen understanding of the intricacies of ACH payments and risk management. / Dennis Walker possesses a diverse background in banking and financial services, bringing extensive experience and knowledge to the discussion on third-party sender relationships.
 

Key Insights

⚡Proactive Approaches to Spotting Third-Party Senders in Banking

Dennis and Stephen discuss strategies for identifying third-party senders in the banking industry. They highlight the importance of keyword analysis, company name checks, and reviewing client portfolios to spot potential third-party senders. Additionally, they stress the need to leverage annual reviews and customer engagement to stay vigilant in risk management.

⚡Balancing Risk Mitigation and Customer Engagement with Third-Party Senders

Dennis, Stephen, and Joe underscore the significance of robust risk management practices and consistent customer engagement in dealing with third-party senders. They emphasize conducting risk assessments, due diligence, and maintaining open communication with clients. These practices help banks and financial institutions safeguard their interests and build trust with customers.

⚡Deciphering the Gray Areas: Classifying Third-Party Senders in Banking

Stephen and Joe explore the complexity of classifying entities as third-party senders in the banking sector. They dive into scenarios where the distinction may not be straightforward, particularly in cases involving common ownership or management. The discussion highlights the need for institutions to make informed decisions and apply due diligence when determining third-party sender status.
 

Episode Highlights

Determining Third-Party Senders in the Banking Industry

Timestamp: [00:20:20]

In this part of the podcast discussion, Dennis and Stephen highlight the challenges and strategies involved in identifying third-party senders in the banking industry. They stress the importance of conducting thorough due diligence, asking key questions about a customer's business, and looking for red flags that may indicate third-party sender activity.

"So they've got ACH with you. They fall into one of those categories. And maybe go visit their website. See if their website offers payment services to their clients. Maybe look at the online banking setup at your financial institution and see if their ACH service is set up with a variety of company names or company IDs being used under it. These can be indicators." - Stephen
 

Mitigating Risks and Ensuring Compliance in Banking

Timestamp: [00:25:11]

Dennis and Stephen discuss the critical importance of managing risks and ensuring compliance when dealing with third-party senders. They emphasize the need for ongoing reviews, client questionnaires, and strong risk management practices. The conversation underscores that it's essential for banks to work closely with clients and educate them about regulatory requirements.

"If the customers aren't willing to work with you, those are the red flags. If you've corrected them and say, you can't do this, you can't originate this [...] Those are some of the red flags that you can kind of say, 'Hey, there's something different here.'" - Dennis
 

Real-Life Scenarios: Third-Party Sender or Not?

Timestamp: [00:33:49]

Stephen and Dennis dive into real-life scenarios that challenge the distinction between third-party senders and originators. They discuss scenarios involving property management companies and subsidiaries of conglomerates. While these situations may seem complex, they clarify that common ownership and management can determine whether an entity is a third-party sender or not.

"I would say this, they are a third-party sender. The condo owner paying their monthly condo fee to the condo association, and the management company is the third party." - Stephen
 

The Value of Collaboration and Resources in Banking

Timestamp: [00:37:17]

In this section, the conversation shifts to the importance of collaboration and resources within the banking industry. Dennis Walker and Stephen Dillon highlight the role of industry organizations like NEACH in providing valuable networking opportunities and resources to professionals navigating complex regulatory landscapes.

"Not to just give you a plug, but really, NEACH as a resource, such a valuable resource. [...] It's, as Dennis says, it's the frontline people, the people who are the operations side, the upfront side, and talking things through, it's hugely helpful." - Stephen

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