International ACH Transactions (IAT) —
Frequently Asked Questions

Why is IAT taking place?

To ensure compliance with U.S. government sanctions policies, a NACHA rule effective September 18, 2009, will require all international ACH transactions to be identified so that they can be screened for unlawful entries. U.S. law prohibits trade or financial transactions with targeted foreign countries and individuals such as terrorists and narcotics traffickers. The sanctions are enforced by the U.S. Treasury Department's Office of Financial Assets Control (OFAC).

How are International Payments processed today?

Today, many international ACH payments are classified as domestic transactions because they enter the U.S. through correspondent banking relationships or bank proprietary systems. They are identified with the Standard Entry Class (SEC) Codes CCD or PPD. This makes it difficult to distinguish them and comply with OFAC sanctions.

What information must I provide when my organization originates IAT transactions?

An IAT contains some of the same information as you provide in an international wire transfer. Below are the mandatory travel rule components that are part of an IAT:

• 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

How can I find out whether my payments are IATs?

NACHA worked with several global banks to develop scenarios describing various payments situations and how those payments would be classified. OFAC agreed to the interpretations contained in those scenarios. The scenarios can be found on the IAT Resource Page at www.nacha.org. One scenario deals with pension payments. Other scenarios deal with vendor and payroll payments.

What actions should I be taking now as an ACH Originator to prepare for the IAT September 18, 2009 implementation?

Review existing vendor, employee and pension payments for possible IAT scenarios (i.e. identify and review whether the ACH credits and/or debits you are originating should be coded as IATs). Use the IAT scenarios available through www.nacha.org as a resource.

Is my ACH Origination software ready for this change?

Talk to your ACH software vendor to ensure your payroll and accounts payable software is capable of creating IAT formatted transactions which include the travel rule components.

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