Automated Clearing HouseInternational ACH Transactions

On September 18, 2009, NACHA is implementing an amendment to the NACHA Operating Rules that has the potential to impact U.S. businesses that send or receive ACH payments. NACHA is responding to a request from OFAC (Office of Foreign Asset Control) to be able to adequately identify transactions that are international in scope.

This amendment will require all payments funded internationally or sent to another country via the ACH Network to be identified as International ACH Transactions using a new Standard Entry Class (SEC) Code—IAT. The new Rule will also require that IAT payments include specific data elements defined by the Bank Secrecy Act's (BSA) "Travel Rule".

Classification of International ACH Transactions

The new rule will classify International ACH Transactions (IATs) by focusing on where the financial agency* that handles the payment transaction (movement of the funds) is located and not where any other party to the transaction (e.g., the Originator or Receiver) is located. Therefore, certain transactions that are currently sent as domestic PPDs or CCDs would be categorized as international transactions and must be sent as IATs.

When To Use The IAT Format:

The following are some questions that will need to be considered in determining if the IAT rule change will impact your company but do not represent an all-encompassing description of IAT scenarios:

  • Does your company buy or sell to organizations or individuals outside the territorial jurisdiction of the United States?
  • Does your company send payroll, pension or benefit payments via the ACH Network to individuals that have permanent resident addresses outside the territorial jurisdiction of the United States?
  • Does your company receive funds from a parent company or subsidiary in another country in order to specifically fund your U.S. ACH payments?
  • Does your company collect funds through ACH to remit payments to individuals in other countries?
  • Is your company a subsidiary of a multi-national company? Does your company have foreign subsidiaries?

If you answered yes to any of the preceding questions please contact your First National Treasury Services representative to assist you in understanding different payment scenarios and your options.

Structuring the Formats to Comply with U.S. Law

The information currently included within the cross-border payment formats and other ACH records does not provide sufficient information for the financial institutions and regulators to readily identify all parties to an international transaction in order to comply with OFAC-administered U.S. sanctions policies. The new IAT format has added mandatory fields to carry the information needed for a regulatory review including:

  • Name and physical address of the originator
  • Name and physical address of the beneficiary
  • Originating bank name, identification number and branch country code
  • Correspondent bank name, identification number and branch country code
  • Receiving bank name, identification number and branch country code

NACHA

For more information, please visit NACHA's website at www.Nacha.org.

* Financial agency means an entity that is authorized by applicable law to accept deposits or is in the business of issuing money orders or transferring funds.

 

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