On Friday, NACHA announced a six month extension of the deadline for International ACH Transactions (IAT) from March 2009 to September 2009. Many smaller banks were caught by surprise by the changes necessary to support IAT. Although software vendors are prepared to make the necessary changes available in upcoming releases and many banks outsource their ACH processing to third party vendors that were on track for March 2009, the new transaction code requires process changes not only at banks but among their customers to ensure that regulations to prevent terriorist financing and money laundering are followed.
Excerpts from the IAT Q&A developed for Corporates by Arlene Chapman at AFP:
What is the definition of an International ACH Transaction (IAT)?
An IAT is an ACH debit or credit entry that is part of a payment transaction originating from or transmitted to an office of a financial agency located outside the territorial jurisdiction of the U.S. The distinguishing feature of an IAT is the geographical location of the financial agency involved in the payment transaction. It does not depend on the location of the originator or receiver of the transaction.
Why is the term “financial agency” used? Why not simply “financial institution”?
The term “financial agency” refers to both financial institutions and money transmitting businesses. An office of a financial agency is involved in an IAT if it: 1) holds an account that is credited or debited as part of a payment transaction; or 2) receives funds directly from or makes payment directly to a person as part of a payment transaction; or 3) serves as an intermediary in the settlement of any part of the payment transaction.
What information must I provide when my organization originates IAT transactions?
The information that must be included in an IAT is the same as the information you provide in an international wire transfer. There are seven mandatory addenda records that are part of an IAT. They must contain:
• 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
The field requirements are consistent with SWIFT standards.
Can I include remittance information with an IAT transaction?
Yes, two optional addenda records accommodate the transmission of remittance
information. A maximum of 160 characters (80 characters per addenda record) can be included.
More from the AFP Q&A available here