Back in August 2007, the National Automated Clearing House Association ("NACHA") approved new rules and a new format for international ACH transactions ("IAT") entries. Development of the rules and format came about as over time due to the U.S. Office of Foreign Assets and Control ("OFAC") pressing NACHA to compel its ACH participants to identify their international entries. Under the new NACHA Rules, IAT entries will now be subject to OFAC screening. The IAT format incorporates required fields that help to provide transparency by identifying those financial institutions handling the entries and the addresses of both the originator and receiver. The new fields will be used by U.S. financial institutions in their OFAC screening process. This is similar to the current regulatory screening requirements within the domestic wire transfer networks.
What is an international ACH entry with the new rules?
An IAT is an ACH debit or credit entry that is part of a payment transaction originating from or transmitted to an office of a financial agency located outside the territorial jurisdiction of the United States. Corporate and comsumer accounts may receive IAT entries.
Where can I find updates and more information on the IAT rule change?
NACHA has devoted an area of their its web site to educational documents regarding IAT. This would be a good web site to check periodically-- http://www.nacha.org/IAT_Industry_Information/
What should I do now to prepare for the IAT Rule rule change?
ACH network participants, such as ACH corporate originators and Third Party Senders, need to identify whether any of their ACH entries should be identified as ACH IAT entries. Currently, some of the international ACH entries within the ACH network look like domestic entries and are identified with the existing Standard Entry Class (SEC) codes such as PPD, CCD, or CTX. However, in the future it may be appropriate to identify the entries with the IAT code based on the international ACH definition.
NACHA has developed several representative scenarios to represent an assessment of situations that which might give rise to a determination of an IAT versus a domestic ACH transaction. You can download these scenarios from PNC's web site or go to the nacha.org/IAT_Industry_Information web site.
What are some of the indicators that might lead my organization to originate IAT entries when the new rules are in effect?
After reviewing the NACHA Scenarios, these are the questions you may wish to ask internally in order to determine whether your organization will originate IAT entries:
Q. When your organization transmits ACH origination files, is an account at the office of an offshore financial agency involved in the funding of the originated entries?For a copy of the ACH Rules book, or if you have any questions regarding the ACH IAT entries, please contact your PNC Treasury Management representative.
Q. When your organization originates ACH credits into the ACH network, does a receiver's account at the office of an offshore financial agency ultimately receive the funds?
Q. When your organization transmits ACH originated entries into the ACH network, does an office of an offshore financial agency serve as an intermediary in the settlement of any part of the payment transaction?
Note: An organization can also be a Third Party Sender or a third party processor acting on behalf of the originating company.