IAT Information
On September 18, 2009, an amendment to the National Automated Clearing House Association Operating Rules will offer a new type of ACH transaction, called International ACH Transaction, or IAT. This amendment requires all international ACH payments to be identified with the IAT Standard Entry Class (SEC) Code and thereby comply with The Office of Foreign Assets Control (OFAC) requirements. Since U.S. Corporations are bound by law to comply with OFAC requirements, you will need to be aware of IAT requirements.
While we do not plan to originate IAT items as soon as they are offered, you still need to know about IAT's if your business receives them. Therefore, we are offering two free, educational webinars through our regional ACH payment association, Mid-America Payment Exchange. To learn more about IAT and whether or not your business will be impacted by it, please read the following release.
NEW REGULATORY REQUIREMENTS FOR ACH
(Automated Clearing House) Processing
Implementation Effective Date - September 18, 2009
On September 18, 2009, an amendment to the NACHA Operating Rules becomes effective with the potential to impact most U.S. businesses that send or receive ACH payments. 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."
The Office of Foreign Assets Control (OFAC) has requested NACHA to align the NACHA Operating Rules with OFAC obligations to enable all parties to transactions to easily identify transactions that are funded internationally or being sent to other countries via ACH Network. The new Rule will identify International ACH Transactions by focusing on where the financial agency that handles the payment transaction is located. Thus, certain transactions currently formatted as domestic transactions, but funded internationally, will be required to be sent as IATs.
The new Rule is an act of industry self-regulation that will assist the federal government in achieving its public policy goals. It will enable corporations, financial institutions and regulators to easily identify all international payments flowing through the ACH Network and all parties involved in the transactions, making it easier for everyone to comply with U.S. law.
While identification of these payments as international transactions and the inclusion of the “Travel Rule” information (i.e., Originator name, address, account number; Originator’s depository institution name and payment amount; Receiver name, address, account number; and the Receiver’s financial institution) will make it easier for receiving depository financial institutions to comply with OFAC-sanctioned guidance, corporations also have OFAC obligations. U.S. Corporations are bound by U.S. law to comply with OFAC requirements and should be reviewing all business relationships, employees and payment instructions against the current Specially Designated Nationals (SDN) list available from OFAC.
How do you determine if IAT applies to your company?
The following provides some general guidance on how to identify potential IAT scenarios. If any of these situations apply to your business it is important to contact your financial institution or cash management officer today.
- If your company is a subsidiary of a multi-national company or has foreign subsidiaries there is a strong possibility that the implementation of the IAT will impact your ACH processing.
- If your company buys or sells to organizations or individuals outside the territorial jurisdiction of the United States you should talk to your financial institution about the impact of the IAT to your company.
- If your company sends payroll, pension or benefit payments via the ACH Network to individuals that have permanent resident addresses outside the territorial jurisdiction of the United States you may be required to use the IAT to send these payments.
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