Treasury Securities ACH & Electronic Transactions — TreasuryDirect Payments and Purchases

When the U.S. Treasury pays interest on a savings bond or redeems a Treasury note, and when an investor buys a T-bill directly through TreasuryDirect, those electronic transfers flow under the rules in 31 CFR Part 370 — the Bureau of the Fiscal Service's regulations governing how ACH (Automated Clearing House) credit and debit entries work in connection with United States securities. Part 370 establishes the framework for how interest payments, redemption proceeds, and securities purchases are transmitted electronically between the Treasury and investors' bank accounts — including what happens when errors occur, when payments are suspended, and what liabilities arise for financial institutions that handle these entries.

Legal Authority

• 12 U.S.C. § 391 — Authorizes the Secretary of the Treasury to prescribe regulations governing the issuance, servicing, and redemption of U.S. obligations; foundational authority for TreasuryDirect and electronic payment procedures
• 31 CFR Part 370 — Bureau of the Fiscal Service regulations governing ACH credit and debit entries for Treasury securities transactions; covers payment of interest, redemption proceeds, and purchase of securities through TreasuryDirect; addresses error correction, suspension of payments, and financial institution liability

Key Mechanics

When an investor buys a Treasury bill through TreasuryDirect or receives interest on a savings bond, the electronic transfer flows under 31 CFR Part 370 — the Bureau of the Fiscal Service's ACH framework for U.S. securities transactions. Part 370 governs three types of electronic entries: (1) ACH credit entries from Treasury to investor bank accounts — interest payments and redemption proceeds; (2) ACH debit entries from investor bank accounts to Treasury — purchases of new securities; and (3) reinvestment entries that roll maturing securities into new ones. Under Part 370, financial institutions that receive ACH debit entries from Treasury on behalf of investors are liable if the account has insufficient funds or the account holder has died — the RDFI (Receiving Depository Financial Institution) bears responsibility for ensuring proper settlement. Treasury may suspend electronic payments when an account holder dies, when the account is frozen, or when fraud is suspected; during suspension, proceeds are held pending proper authorization. Error correction follows standard NACHA rules modified by Part 370's specific procedures: Treasury may initiate reversal entries within the standard 5-banking-day window, and financial institutions must handle reversals in the same manner as any NACHA return. The regulation applies only to transactions through TreasuryDirect and the Bureau of Fiscal Service — secondary market Treasury trading goes through the Federal Reserve's securities settlement systems rather than Part 370.

Current Rule (2026)

What This Rule Does

31 CFR Part 370 covers three types of electronic transactions for Treasury securities:

Credit ACH entries (Subpart B): When Treasury makes a payment to a securities holder — a coupon payment on a Treasury bond, a redemption payment when a T-bill matures, an interest credit on a savings bond — it uses ACH credit entries to deposit the funds into the investor's designated bank account. The investor designates a financial institution and deposit account; Treasury sends an ACH credit through that institution; the institution credits the account on the payment date.

Debit ACH entries (Subpart C): When an investor buys a Treasury security through TreasuryDirect, they authorize Treasury to initiate ACH debit entries — pulling money from the investor's bank account to pay for the purchase. The debit authorization must be in writing; Treasury may send a "prenotification" test entry to confirm account validity before initiating the actual debit; the financial institution processes the debit under NACHA operating rules as modified by Part 370.

Electronic submission of transaction requests (Subpart D): Investors who submit transaction requests electronically — through the TreasuryDirect web portal or other approved interfaces — sign those requests with electronic or digital signatures. This subpart establishes the legal framework for those signatures: when they become effective, where the transaction is legally "located" (Parkersburg, West Virginia), and the admissibility of digital signatures in disputes.

Key Provisions

• § 370.5 — Designating a financial institution: investors must name a financial institution and specific deposit account to receive ACH credit payments; changes to the designated account can be requested by the investor or the financial institution; Treasury updates the account without requiring new investor authorization when a financial institution (not the investor) requests a change — a feature designed to accommodate bank mergers and account number changes
• § 370.6 — Financial institution obligations for credit entries: a financial institution that accepts and handles a Treasury ACH credit agrees to comply with all NACHA Operating Rules as modified by Part 370; the institution must make the payment available to the investor on the payment date, not held until the next business day; delay in crediting constitutes a violation of Part 370
• § 370.8 — Prenotification entries: Treasury may (at its discretion) send a "prenotification" zero-dollar test entry to a financial institution before sending an actual credit; if the institution returns the prenotification (indicating the account does not exist or is closed), Treasury will not send the credit entry until the investor provides a valid account; this prevents failed credit entries
• § 370.10 — Payment suspension triggers: Treasury will suspend ACH credit payments if it receives notice that: (a) the designated deposit account has been closed; (b) a named account holder has died or been declared legally incompetent; or (c) a government agency has notified Treasury of a claim against the securities; suspension continues until the investor provides corrected account information or the legal issue is resolved
• § 370.11 — FI obligations upon receiving credit: the financial institution must make the payment available to the investor on the payment date; the institution cannot hold the funds for float; failure to credit on the payment date violates Part 370's requirements
• § 370.12 — Error correction for credit entries: if Treasury makes an erroneous credit (for example, crediting the wrong amount), it will make a corrected credit entry and initiate a return of the erroneous entry; Treasury may recover erroneous payments by debit entry; the investor and financial institution must cooperate in the recovery process
• § 370.15 — Liability limitation for credit entries: Treasury may rely on account information provided by the investor or the investor's authorized representative; Treasury's liability does not extend to delays caused by the investor's failure to update account information, by the financial institution's processing failures, or by circumstances beyond Treasury's control (including ACH network outages)
• § 370.20 — Debit authorization requirements: to authorize Treasury to debit an account for a securities purchase, the investor must provide written (including electronic) authorization designating the specific account; the authorization must be in compliance with NACHA's authorization requirements; for TreasuryDirect purchases, the authorization is granted through the online interface
• § 370.22 — Financial institution debit obligations: a financial institution that receives a debit entry initiated by Treasury agrees to comply with NACHA operating rules as Receiving Depository Financial Institutions; the institution warrants that it will not dishonor a properly authorized debit entry unless required to by law (for example, if the account is frozen by a legal process)
• § 370.24 — Treasury's right to terminate debit entries: Treasury may terminate or suspend debit entry availability in any case or class of cases, at any time and without notice; this unilateral reservation of authority protects Treasury from situations where systemic fraud or account abuse makes it necessary to halt automatic debits
• § 370.36 — Electronic transaction effectiveness: a transaction request submitted electronically becomes effective at the moment Treasury sends a confirmation message; auction bids for Treasury securities have their own effectiveness rules under the auction regulations
• § 370.37 — Jurisdiction: for jurisdiction and venue purposes, all electronically submitted transaction requests are treated as transactions occurring in Parkersburg, West Virginia (the Bureau of the Fiscal Service's operations center); this locates legal disputes in federal court in West Virginia regardless of where the investor is physically located
• § 370.38 — Legal effect of electronic signatures: electronic signatures on Treasury transaction requests have full legal effect; they may not be denied enforceability solely because they are electronic rather than handwritten; this implements the Electronic Signatures in Global and National Commerce Act (E-SIGN Act) for Treasury securities transactions
• § 370.45 — Failed remittance: if Treasury cannot collect the full payment for a security purchase (the investor's bank returns a debit entry for insufficient funds or closed account), Treasury may cancel the security unless it has been legally transferred for value to a third party who had no notice of the problem; a canceled security is treated as if never issued
• § 370.47 — Treasury's modification authority: Treasury reserves the right to change any aspect of Part 370 at any time and without notice; investors using TreasuryDirect or other direct investment systems "assume the risk that a change may terminate a provision that was to [their] advantage" — a broad disclaimer that reflects Treasury's position as both regulator and counterparty in these transactions

How It Affects You

If you are an individual investor using TreasuryDirect (treasurydirect.gov): Part 370 governs the mechanics of how your interest payments are deposited and how your purchase debits are processed. The most practically important provisions: keep your bank account information current (§ 370.5–370.9) — if Treasury can't deliver your payment because your account has changed, payments will be suspended; you won't receive automatic notice unless you're monitoring your TreasuryDirect account. If you authorize a debit for a T-bill purchase and your bank returns it for insufficient funds, Treasury may cancel the security (§ 370.45). If there's an error in a credit you received, expect Treasury to initiate a debit entry to recover it (§ 370.12) — the recapture is automatic.

If you are a financial institution (bank, credit union) that handles Treasury security payments for customers: You are a party to Part 370 whenever you accept a Treasury ACH credit or debit entry on behalf of a customer. Your obligations mirror NACHA operating rules but with Treasury-specific modifications: you must credit on the payment date (not next-day), you must honor properly authorized debits, and you bear liability for losses caused by your mishandling of entries (§ 370.15, § 370.26). If a customer's account is closed after Treasury has sent a credit that you returned, communicate that to the customer immediately — their securities payments are suspended until they update TreasuryDirect.

If you work in Treasury operations, fiscal agency, or payment systems policy: Part 370 is a companion regulation to 31 CFR Parts 363 (savings bonds), 357 (book-entry T-bills/notes/bonds), and 346 (U.S. Savings Bonds by electronic means). Together, they form the legal framework for direct Treasury-to-investor electronic securities transactions. The Bureau of the Fiscal Service processes over $600 billion in securities payments annually; Part 370's rules govern the ACH processing mechanics for retail investors while the Fedwire Securities Service handles the institutional-scale transactions.

Statutory Authority

This rule implements:

• 12 U.S.C. § 391 — authorizes Federal Reserve Banks to act as fiscal agents of the Treasury and establish the framework for Treasury security transactions through the Federal Reserve Banks; Part 370 implements this authority for the Bureau of the Fiscal Service's ACH-based payment systems

Recent Rulemakings

2013 amendments — updated the electronic signature provisions (Subpart D) to clarify the legal effect of digital signatures and the admissibility standard for digital signatures in disputes, bringing Part 370 into alignment with the E-SIGN Act and federal court practice. Earlier amendments in 2003 originally codified the electronic transaction framework when TreasuryDirect migrated to its current internet-based platform. No major amendments since 2013.

Pending Action