New Automated Clearing House (ACH) rules that may affect you.
October 5, 2009
The National Automated Clearing House Association (NACHA), the association that oversees the electronic funds transfer system known as the ACH Network, implemented a new rule on September 18, 2009, that may affect customers who originate or receive ACH transactions.
The rule change, made at the request of the Office of Foreign Assets Control (OFAC), requires additional information on certain ACH transactions that will enable banks to identify and screen a payment transaction involving a financial agency’s office located outside the U.S.
Commercial Bank does not currently allow the origination of foreign ACH transactions; however, domestic transactions may be directly funded from outside the U.S.
In the past there were internationally funded payments that were originated into the U.S. ACH network that could not be identified as international transactions. OFAC requested that NACHA modify the NACHA Operating Rules to adequately identify international transactions and have banks review them for OFAC compliance.
As a result of the request, NACHA has created a new transaction code called IAT, which stands for International ACH Transaction. An IAT is an ACH entry that is part of a payment transaction involving a financial agency’s office that is not located in the territorial jurisdiction of the United States. For example, a retiree living in the United States who receives a pension from a foreign country.
How are you affected?
Both originators and receivers of ACH transactions may be affected by the new rule. Originators are usually businesses, while receivers may be either businesses or individual consumers.
If you receive funds via an IAT, you may be affected in a couple ways:
• The company originating the IAT may request additional information from you.
• The enhanced screening required for an IAT could delay settlement and/or availability.
For more information about IATs please visit http://www.nacha.org/iat_industry_information/.
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