International ACH Transactions IAT

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International ACH Transactions (IAT)
Purpose, Definitions and Impact
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IAT
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IAT Two-fold Purpose

• Respond to OFACs request to align ACH Rules with
  OFAC compliance obligations

Make it easier for RDFIs to comply with OFAC
obligations
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Defining IAT

• An ACH entry that is part of a payment
  transaction involving a financial agencys office
  that is not located in the territorial
  jurisdiction of the United States.

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Defining IAT

• An ACH entry that is part of a payment
  transaction involving a financial agencys office
  that is not located in the territorial
  jurisdiction of the United States.

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Defining IAT

• An ACH entry that is part of a payment
  transaction involving a financial agencys office
  that is not located in the territorial
  jurisdiction of the United States.

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Defining IAT Payment Transaction

• Instruction

Settlement
Instruction of a sender to an FI to pay, or to
obtain payment of, a fixed or determinate amount
of money that is to be paid to, or obtained from,
a receiver
Any and all settlements, accounting entries, or
disbursements that are necessary or appropriate
to carry out the instruction
AND
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Defining IAT Financial Agency Office

• Office of financial agency is involved in the
  payment transaction if it

Holds an account that is credited or debited as
part of the payment transaction OR
Receives funds directly from a Person or makes
payments directly to a Person as part of the
transaction OR
Serves as an intermediary in the settlement of
any part of a payment transaction
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Defining IAT U.S. Territorial Jurisdiction
The territorial jurisdiction of the United States
includes

• All 50 states

• U.S. territories

• U.S. military bases

• U.S. embassies in foreign countries

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IAT

• Payment Transaction

Financial Agency
U.S. ACH Network
Instruction and Settlement
Outside the territorial jurisdiction of the
United States
Use of the IAT SEC code is required IF the
transactions flow through the U.S. ACH Network at
some point
Location of the originator and beneficiary are
not considered in the identification of an IAT
transaction
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Additional Definitions Gateway Operators

• Entry point to or exit point from the United
  States for payment transactions

Entry point to
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Additional Definitions Gateway Operators

• Entry point to or exit point from the United
  States for payment transactions

Exit point from
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Additional Definitions Gateway Operators

• If you are a Gateway Operator

• ACH Operators
• May process outbound IAT debit or credit entries
• Limit inbound IAT entries to credits and reversals

• Participating DFIs
• May process outbound and inbound IAT debit and
  credit entries

For more info, consult the latest ACH Rules
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What else is changing?

• Formatting modifications

• BSA Travel Rule data elements added to seven
  mandatory Addenda Records

• Two optional OFAC screening indicators added

• Mandatory identification of Foreign Correspondent
  Banks

• Optional remittance data in two Addenda Records

For more info, consult the latest ACH Rules
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What else is changing?

• Returns

• The seven mandatory Addenda Records must be
  transmitted with IAT return entries

• One additional Addenda Record required to provide
  information specific to the return

• Dishonored and contested return entries are not
  permitted with IAT

For more info, consult the latest ACH Rules
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What else is changing?

• Notifications of Change (NOCs)

• Changes to routing and account numbers for IATs
  may be transmitted via NOCs

• NOCs for IATs will have unique formatting,
  including the addition of an IAT Indicator code

• Transmission of refused NOCs is not supported by
  IAT

For more info, consult the latest ACH Rules
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How does this impact me?

• Originators

• Use IAT SEC code to identify international ACH
  transactions

• Examine receiver relationships to properly
  identify IAT transactions

For more info, consult the latest ACH Rules
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How does this impact me?

• ODFIs and RDFIs

• Know and comply with OFAC requirements

• Establish written OFAC compliance policies and
  procedures

For more info, consult the latest ACH Rules
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How does this impact me?

• ODFIs and RDFIs

• Be aware that IAT returns are allowed more time
  than domestic returns

• Continue to receive CBR/PBR entries through Dec.
  31, 2009

For more info, consult the latest ACH Rules
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Summary

• Introduces new SEC Code IAT

• New formats/addenda records to comply with U.S.
  law

• Effective Sept. 18, 2009, replaces CBR, PBR and
  international PPD and CCD

• For more info, see
• www.NACHA.org
• ACH Rules