As per the new law that will come into effect from June 30th,2021 all financial institutions that are storing deposit account information should store that information in encrypted form for record purposes.
The new rule was passed by the National Automated Clearinghouse Association (NACHA), a governing body of ACH Network that keeps a tab of all debit and credit payments made to accounts. And the rule will apply to all financial transactions that take place among businesses, consumers, federal payments and payments made to state and local governments.
NACHA’s rule will apply to all money transactions that are stored electronically by banks, lending institutions, insurance firms and third parties that are into the business of transaction warehousing, posting and client info reporting systems.
All paper authorizations and other documents containing ACH numbers will also come into the latest rule’s scope.
Note 1-ACH indulges in 118 million payments per day and over 2.7 billion payments in a single month. And that can account for over $62 trillion in a single financial year.
Note 2-Thus with the onset of the latest rules, organizations dealing in money transactions should use techniques such as encryption, truncation, tokenization, destruction
Note 3-Password based protection for storing transaction data is not accepted by NACHA as it adheres encryption as the only accepted standard provided it is also supported with physical security.
Note 4- Incorporated in 1974, NACHA is not directly linked to ACH transactions and represents over 10,000 financial institutions in United States.