HERNDON, Va. - Last week NACHA-The Electronic Payments Association approved an operating-rules amendment requiring all international automated clearing house payments made through the network to be identified as "international" transactions. All such transactions will now be identified by the "IAT" (international ACH transactions) code.
NACHA says the new rule will also require that IAT payments include specific data defined by the Bank Secrecy Act's "Travel Rule." The Travel Rule requires that the originator's name, address and account number be provided, as well as the originator's depository institution name and payment amount. The recipient's name, address and account, as well as the receiving FI, also must be disclosed.
The amended rule is expected to take effect March 20, 2009.
IATs will be identified by focusing on where the financial agency that handles the payment transaction is located. Certain transactions currently formatted as domestic transactions will be sent as IATs.
Under the current rules, payments initiated internationally enter the U.S. ACH network through correspondent banking relationships. Consequently, a number of international payments are formatted as domestic transactions, making it difficult for depository FIs to identify the transactions' origins to comply with U.S. law.
"The new rule is an act of industry self-regulation that will assist the federal government in achieving its public policy goals," said Priscilla Holland, senior director of network development at NACHA. "It will also enable financial institutions to easily identify all international payments flowing through the ACH network and all parties involved in the transactions, making it easier to comply with U.S. law."
While FIs can rely on each other for compliance to U.S. law in the domestic payment environment, depository FIs cannot rely on international FIs to comply with OFAC-sanctioned examination procedures included in the Federal Financial Institutions Examination Council's Bank Secrecy Act/Anti-Money Laundering Examination Manual, NACHA says.
