ACH Industry News
NACHA Rule Change -- March 2009
International ACH Transactions (IAT)
Effective March 20, 2009: International ACH Entries
On August 14th, the NACHA community approved an International ACH rule change that has been in the making for a few years and will take effect on March 20, 2009. The rule redefines International ACH entries to incorporate payment activities that currently are easily identified as cross-border entries but also those that look like U.S. domestic entries but in fact one side of or party to the transaction-either the originating financial institution or receiving financial institution-is not located in the territorial jurisdiction of the U.S. The rule also retires those ACH Standard Entry Class (SEC) codes and the formats adopted in 2000, the PBR (Consumer Cross-Border) and CBR (Corporate Cross-Border Transaction) codes. PBR/CBR will be replaced with a single SEC code, IAT (International ACH Transaction). The IAT format will carry seven mandatory addenda records to satisfy the Bank Secrecy Act's "Travel Rule" information:The IAT format can also accommodate two optional addenda records of remittance information. The expanded definition of what qualifies as an International ACH entry and then also the expanded format fields that are conveyed with the entry make it easier for ACH network participants to monitor for signs of terrorism or crime but there also will be costs associated with the changes. Organizations that will originate IATs will need to collect and store new fields of information for building their ACH records and their Originating banks will need to be able to provide robust edits for this origination code. The Receiving banks will need to be ready to receive the IAT payment type even if they don't decide to originate this entry type. Receiving banks will need to store the data for reporting to their accountholders receiving IATs and to service inquiries. They will also be responsible for investigating suspect transactions. The U.S. Office of Foreign Asset and Control (OFAC) gave NACHA the opportunity to self-govern by updating the Originator and Originating bank obligations and requirements under OFAC. NACHA took seriously the message that OFAC would step in if NACHA did not take steps to address this gap in the network and now that with the rule approval, all financial institutions will have 18 months to prepare for substantial changes even if they are just receiving IATs.NACHA, the Electronic Payments Association, developed scenarios to represent an assessment of situations that might give rise to a determination of an IAT or a domestic ACH transaction. Download these scenarios.
- Name and physical address of the Originator;
- Name and physical address of the Receiver ("Beneficiary");
- Account number of the Receiver;
- Identity of the Receiver's bank;
- Correspondent Bank(s) name, Bank ID number and Bank Branch Country Code;
- Reason for the payment.
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