Personal International ACH Transactions

FAQs

1. What is an IAT?
   The IAT is a new Standard Entry Class code for ACH payments to identify international transactions. International transactions are those payments that have been funded internationally or are being sent to another country and a part of the transaction will be processed via the ACH Network.
2. Why was the IAT developed?
   The IAT was developed in response to a request from the Office of Foreign Asset Control (OFAC). In its letters to NACHA, OFAC stated that it thought that the ACH Network is vulnerable to abuse due to the speed and efficiency of the Network. OFAC understands that there are currently transactions flowing through the Network that are funded by international sources. These transactions cannot currently be identified within the Network and are formatted as domestic transactions. OFAC has requested that NACHA modify the NACHA Operating Rules to adequately identify international transactions and have the banks review the international transactions for OFAC compliance.
3. How does this rule impact me?
   If you receive ACH transactions that originate outside the United States the originator is required to use the new SEC code, IAT, to identify the transaction as international. In addition, some originators are taking a conservative position…even if the funds are being sent domestically, if the address of the receiver on their records is a non-US address they may send the funds as an IAT transaction. The reason for this is that there is a risk that the funds once settled to the receiver may be funded or transferred internationally. All inbound IAT transactions are required to comply with OFAC obligations. Each US party to a transaction i.e. US Gateway Operator, the Federal Reserve and the Receiving US Financial Institution is required to review transactions for OFAC compliance. In the event that an IAT transaction is identified as a potential suspect it must be cleared before it can be posted which may result in a delay in posting to your account.
4. What are some examples of an IAT?
   • You buy or sell internationally through PayPal or similar applications, it might be an IAT.
   • You travel overseas and make purchases using wither a debit card or check, it might be an IAT.
   • You have decoupled debit cards linked to an account at our bank and you travel overseas utilizing the card, it might be an IAT.
5. Can I return or place a stop payment on an IAT transaction?
   Yes, there is no change to the ACH rules regarding returns or stop payments.