INTERNATIONAL ACH TRANSACTION REVISIONS

I.          INTRODUCTION

All United States financial institutions and other organizations that send and receive international ACH transactions (IAT) will have to incorporate additional remittance data identifying both the sender and recipient beginning September 18, 2009.  According to the rules promulgated by NACHA, all ACH payments entering or exiting the United States must be uniquely identified and formatted as an IAT.

II.        INTERNATIONAL ACH TRANSACTIONS

The NACHA rule defines an IAT as “a credit or debit entry that is part of a payment transaction involving a financial agency’s office that is not located in the territorial jurisdiction of the United States.”  The deciding factor in determining whether or not a transaction is considered an IAT is the “location of the financial agencies involved in the processing and settlement of the transaction.”

NACHA has created sample ACH scenarios to help financial agencies understand when and why a transaction is considered a domestic ACH or an IAT. 

A financial agency is responsible for following the IAT rules if they are involved in a payment transaction in any of the following ways:

  • holds an account that is credited or debited as part of the payment transaction; or

  • receives payment directly from a person or makes payment directly to a person as part of a payment transaction; or

  • serves as an intermediary in the settlement in any part of a payment transaction.

The rule creates a new format which identifies an IAT transaction by the SEC code “IAT,” which applies to both consumer and business accounts.  Financial agencies must incorporate this new format into their ACH process so that all IATs are identified as such and then screened for unlawful entries. 

While many financial institutions may not consider themselves to be subject to the new rule, set forth below are a few examples of the types of situations that may involve an IAT.

Payroll/Retirees/Benefits

  • You have employees working in countries outside the legal jurisdiction of the U.S., either permanently or on a temporary basis, and you continue to pay them using direct deposit;

  • You have retirees who have moved outside the legal jurisdiction of the U.S., either permanently or on a temporary basis and they are receiving pension or other deposits through direct deposit;

  • Employees of your organization are receiving direct deposit and are then using the funds to forward to family members located in another country.

Vendors/Suppliers/Business Partners

  • You conduct business with vendors, suppliers, or business partners that are located outside the legal jurisdiction of the U.S. and you initiate payments to them using the ACH Network;

  • You sell products or services to parties outside the legal jurisdiction of the U.S. and payments are made to you via the ACH network.

III.       ADDITIONAL RESOURCES

For additional information and resources regarding IAT, view NACHA’s Web site for IAT industry information at https://www.nacha.org/content/international-ach-transactions-iat-solutions-center for links to the following documents:

  • IAT Revised FAQs

  • IAT FAQs for Corporate

  • IAT FAQs for Formatting

  • IAT Payments Scenarios

  • Domestic or International?

  • OFAC Domestic ACH Policy

  • Glossary of Terms for International ACH

  • IAT Corporate Toolkit

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