International ACH Transactions (IAT)The biggest change revolutionizing the ACH Industry - International ACH Transactions (IAT) - will become effective September 18, 2009. Before then, there are several rule changes you need to be aware of. Your credit union may be impacted even if you don't currently think you're receiving International ACH items! Here's what you need to know.
Current "IAT" Processing
Currently, many payments initiated internationally are introduced into the U.S. ACH network through domestic correspondent banking relationships. As a result, international payments are being transmitted as domestic transactions using domestic standard entry class (SEC) codes such as PPD or CCD, making it difficult for depository financial institutions to identify these transactions as international items and perform adequate OFAC review.
New Regulatory Requirements for IAT
Effective September 18, 2009, all ODFIs and Gateway Operators will be required to identify all international ACH payments as such by using a new SEC code of IAT and including the BSA "Travel Rule" data elements in 7 mandatory Addenda Records. This change will effectively eliminate the CBR and PBR SEC codes, which are not sufficient to allow an RDFI to readily identify all parties to an international transaction.
The Purpose Behind the Change
The Office of Foreign Assets Control (OFAC) requested the change in order to align ACH Rules with OFAC compliance obligations. The new rule will classify IATs by focusing on where the financial agency that handles the payment transaction is located and not where any other party to the transaction is located. The new IAT code and Travel Rule* data requirements will ensure all parties have the information necessary to comply with U.S. law, making it easier for RDFIs to comply with OFAC obligations. ALL financial institutions are responsible for ensuring their own OFAC compliance**.
* Required Travel Rule Information ** OFAC Compliance for IAT
Name and physical address of Originator Must have a written OFAC compliance policy
Name and physical address of Receiver Review inbound & outbound entries, checking
Account number of Receiver all parties to transaction, remittance data, &
Identity of Receiver's FI correspondent banks
Reason for the payment
Correspondent Bank(s) name, Bank ID & Bank Branch Country Code
More Information...
Click on the following resource links for additional information:
For questions, contact Kip Poe, AAP, VP, Information & Technology, at 800.721.2677 | Ext. 104 or kipp@kansascorporate.org.
