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Understanding the International ACH Transaction (IAT)
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© JPMorgan Chase & Co. All rights reserved. JPMorgan Chase Bank, N.A. Member FDIC
Understanding the International ACH Transaction (IAT)
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1
Background
What are International Payments?
Understanding the International ACH Transaction (IAT)
• International payments are credit and debit payment instructions
exchanged across national borders to transfer value between an
Originator (sender) and a Receiver (beneficiary)
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Payment Options/Communications in the U.S.
Urgent
Understanding the International ACH Transaction (IAT)
Domestic
International
Non-Urgent
•Book Transfer
•Fedwire
•CHIPS
•SWIFT Message
•Check
•Cards
•ACH
•Money Transmitter
•PayPal
•Book Transfer
•CHIPS
•SWIFT Message
•Fedwire
•Check
•Cards
•Money Transmitter
•ACH
•PayPal
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Regulatory
 Within U.S. Domestic ACH
 Electronic Funds Transfer Act (Reg E)
 UCC4A
 NACHA Operating Rules
 OFAC
Understanding the International ACH Transaction (IAT)
 Internationally
 No global rules body
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Office of Foreign Assets Control (OFAC)
 Administers and enforces economic and trade sanctions based
on U.S. foreign policy and national security goals against
 Targeted foreign countries
 Terrorists
Understanding the International ACH Transaction (IAT)
 International narcotics traffickers, and
 Those engaged in activities related to the proliferation of
weapons of mass destruction
 Therefore requiring screening of electronic payments entering
and exiting the U.S.
http://www.ustreas.gov/offices/enforcement/ofac/
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International ACH Functionality
 No Global or International ACH Operator currently exists;
therefore no single International ACH system is available
 Historically with U.S. ACH –
 1993 NACHA Cross Border Council began work on the process and rules
to facilitate batch payments between domestic ACH systems in
different countries
 1997 first Cross Border Payment Operating Rules Approved
Understanding the International ACH Transaction (IAT)
 September 2000 new SEC codes - CBR/PBR
 September 18, 2009 – IAT (International ACH Transaction) replaced
CBR & PBR
 Update to IAT: Sept. 8, 2011, 14 NACHA Operating Rules Amendments
passed for IAT Entries – Effective dates range from 3/16/2012 to
3/15/2013
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International Payment Risks & Challenges
 U.S. OFAC and other government regulations vs. government regulations in
other participating countries
 No internationally utilized standard for batch processing is available
 No common set of rules exists
 No international counterpart to the U.S. prenotification process available
 Settlement times vary by country
Understanding the International ACH Transaction (IAT)
 Different formats exist for account numbers and bank routing numbers
 Holiday schedules vary by country
 Reversals are not allowed in many countries
 Debit rules vary by country
 Return Entry times and procedures vary from country to country
 Some clearing systems have local language requirements
 Local currency is required for domestic payment systems, plus fluctuation in
local currency exchange rates
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What is the International ACH Transaction (IAT)?
•
Rule for US ACH payments implemented 9/18/09
• Changed the definition of an international ACH transaction
• Replaced an existing cross border ACH payment type (CBR/PBR)
Understanding the International ACH Transaction (IAT)
• Enabled compliance with US laws
Benefitted Users Through:
 A reduction in funds movement costs
 More predictable cash flow
 Reduction in need to maintain multiple bank relationships globally
 Settlement on a specified value date
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Gateway/Foreign Gateway
 Two Gateways -one in the U.S. and one
Foreign - are needed for an International
ACH transaction (IAT)
— One Gateway is an exit point from the
national payments system of the
originating country
Understanding the International ACH Transaction (IAT)
— Another Gateway is the entry point to
the national payments system of the
receiving country
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International ACH Payment Overview
Understanding the International ACH Transaction (IAT)
Foreign Gateway
Originator
(outside of U.S.)
ODFI
National
Payments
Systems
FX
Settlement
Translation
Gateway
Receivers (in the U.S.)
RDFI
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OFAC Jurisdiction
 U.S. citizens and permanent resident aliens
 Companies located in the U.S.*
Understanding the International ACH Transaction (IAT)
 Overseas branches of U.S. companies*
 For the U.S. ACH Network, this means all participants in
any of these categories are subject to Federal Sanctions
policies
* Includes Financial Institutions
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Trends in U.S. Sanctions
• Groups or specific activities being added (e.g. “war on terror”
-- terrorists and terrorist-financing arms, narcotics traffickers)
• Increased frequency of updates
Understanding the International ACH Transaction (IAT)
• More multi-lateral in scope and coordination
• OFAC, FinCEN*, and other financial crime offices are now
consolidated under the U.S. Treasury Department’s Office of
Terrorism and Financial Intelligence
* Financial Crimes Enforcement Network (www.fincen.gov)
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OFAC Penalties
 Both Criminal and Civil
 Vary by sanctions program
 Can include:
Understanding the International ACH Transaction (IAT)
 Imprisonment (employee)
— 10-30 years depending on the program
 Fines per count (corporate and individuals)
— $10,000 - $10,000,000 per count
 Forfeiture of property
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OFAC & Domestic ACH
 Understanding on domestic ACH arrived in 1997*
 NACHA Rules required only lawful transactions be initiated, put onus on
Originator
Understanding the International ACH Transaction (IAT)
 Recognition at the time of low exposure on domestic transactions
 Recognition at the time of batch nature of ACH processing and lack of
efficient interdiction software
OFAC
*OFAC letter Gen-155913 to Mr. Elliott McEntee of NACHA; 3/20/97
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OFAC & International ACH
 NACHA began working with OFAC in 2004 on the proposed rule change for
International ACH transactions
Understanding the International ACH Transaction (IAT)
 Speed and efficiency made ACH vulnerable to abuse with respect to
international cross-border movement of funds
 Additional information was needed to permit an adequate degree of scrutiny of
transactions for OFAC compliance
 One key element was to add the “Travel Rule” information to allow
identification of all parties to the transaction
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What is the “Travel Rule”?
• 31 CFR 103.33(g) of Bank Secrecy Act
• Banks and Originators must include certain information (Name
and Address, Account number, Amount, Execution Date, ID of
Receiving FI, similar information about Recipient) in covered
payment transmittal orders
Understanding the International ACH Transaction (IAT)
• Information must "travel" with transaction end-to-end
• ACH/EFTs covered by Regulation E Exempt [31CFR 103.11(jj)]
for domestic transactions, but not exempt for international
transactions
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OFAC Request
Letter from OFAC to NACHA dated November 9, 2004 that got this
started:
Understanding the International ACH Transaction (IAT)
• US RDFIs and Beneficiaries will continue to have an obligation to
ensure that all aspects of inbound, cross-border transactions are
in compliance with OFAC regulations and to take appropriate
steps to investigate, suspend, reject, block and report on
transactions as necessary (Inbound IATs)
• US ODFIs and their Originators will continue to be responsible
for ensuring that all parties to the transaction, as well as the
underlying purpose of the transaction, are not in violation of
OFAC regulations, and they will need to take appropriate steps to
investigate, suspend, reject, block and report on transactions
(Outbound IATs)
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Changes to International Payments
NACHA’s Primary Purposes for the IAT:
• Respond to OFAC’s request to align the ACH Rules with OFAC
compliance obligations, and
Understanding the International ACH Transaction (IAT)
• Make it easier for RDFIs to comply with those obligations
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Inbound IAT Process Flow
United States
Europe
Understanding the International ACH Transaction (IAT)
Originator
Bank A sends a SWIFT
or proprietary message to
Bank B
Bank A
Foreign
Gateway
US
RDFI
Country Border
IAT Format
Required for
ACH transactions
sent through the
US ACH
US
RDFI
US
RDFI
Bank B
US Gateway can be
a DFI or ACH Operator
Foreign Gateway sends a SWIFT or
proprietary message to US Gateway (DFI) the
SWIFT message is translated to the IAT ACH
format for distribution to the US RDFI
US - ACH
Operator
Gateway sends
IAT transactions to ACH
Operator for distribution
To US RDFIs
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Outbound IAT Process Flow
United States
Europe
Originator
Country Border
Understanding the International ACH Transaction (IAT)
Originator sends IAT to US
Gateway
Foreign Gateway may be a bank or ACH Operator
in the receiving country
IAT Format
Required for
ACH transactions
sent through the
US ACH
US Gateway
US Gateway can be
a DFI or ACH Operator
Foreign Gateway
European Banks
Foreign Gateway sends payments to RDFI through
domestic payments system in the receiving country
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Definition of International ACH Transaction
Understanding the International ACH Transaction (IAT)

International ACH Transaction – a debit or credit 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
An office of a financial agency is involved in the payment transaction if it:
1. holds an account that is credited or debited as part of the payment
transaction, or
2. receives payment directly from a Person or makes payment directly
to a Person as part of the payment transaction, or
3. serves as an intermediary* in the settlement of any part of the
payment transaction
 Financial agency means an entity that is authorized by applicable law to
accept deposits or is in the business of issuing money orders or
transferring funds
*In the role of a Correspondent Bank
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Understanding the International ACH Transaction (IAT)
Payment Transaction Guidance

Payment Transaction definition as per OFAC

Within the IAT definition, payment transaction refers to:
1)
An instruction of a sender to a bank to pay, or to obtain
payment of, or to cause another bank to pay or to obtain
payment of, a fixed or determinate amount of money that is
to be paid to, or obtained from, a Receiver, and
2)
Any and all settlements, accounting entries, or
disbursements that are necessary or appropriate to carry out
the instruction
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Understanding the International ACH Transaction (IAT)
IAT Definition - continued

The IAT definition classifies international payments based on
the geographical location of the financial agencies (financial
institutions or money transmitting businesses) involved in the
transaction, instead of on the location of the other parties to
the transaction (e.g., Originator or Receiver)

Payment transactions that start as wires or interbank transfers
from abroad and are converted to ACH Entries by a U.S.
financial agency would be covered under this definition

On the other hand, ACH Entries originated from an account at
a U.S. DFI based on instructions from the account holder
residing abroad would not be covered, unless the instructions
were included with funding in a SWIFT or proprietary message
sent from a foreign financial institution to the U.S. DFI

Similarly, domestic ACH Entries funded over the counter at a
U.S. DFI would be excluded, while a similar entry funded at a
foreign bank would be included (See OG 168-174 for more
examples)
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IAT Formula =
Payment
Transaction
Financial
Agency
+
+
(Instruction + Settlement)
Understanding the International ACH Transaction (IAT)
(Outside the
Territorial Jurisdiction
of the United
States)
U.S.
ACH
Network
=
IAT
Use of the IAT SEC
code is required IF
the transactions
flow through the U.S.
ACH Network at
some point!
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Reason for Payment
Understanding the International ACH Transaction (IAT)
 OFAC requested that the reason for payment be included in IAT payment
transactions
 Reason for Payment is a 3 digit code, included in the Transaction Type Code
Field, with pre-defined codes (examples)
— ANN – annuity
— BUS – Business/Commercial
— DEP – Deposit
— PEN – Pension
— RLS – Rent/Lease
— SAL – Salary/Payroll
— TAX - Tax
 All Transaction Type Code Values are listed in Appendix Three of the 2012
NACHA Operating Rules
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Transaction Type Codes
 Expanded the use of the Transaction Type Code Field for Inbound IAT
transactions to carry a “Secondary SEC Code” for WEB, TEL, ARC, POP, BOC,
and RCK
Understanding the International ACH Transaction (IAT)
 If ARC, BOC or RCK Codes are listed, a NACHA banking convention has been
developed to carry the Check Serial Number*
 And for POP Entries, the Check Serial Number and Terminal City and Terminal
State go in the Payment Related Information of the Remittance Addenda
Record*
* This information is found in the IAT Addenda Record for Remittance
Information – see Appendix Three in 2012 NACHA Operating Rules
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Addition to Article One - General

Exemption From Rules Obligations
A Participating DFI would not be required to debit or credit an account or to
transfer funds if the Participating DFI reasonably believes that taking such
action in connection with a specific Entry would violate applicable U.S.
Legal Requirements*

Understanding the International ACH Transaction (IAT)
—
—
Example: excuses an RDFI from its obligation to recredit a Receiver for an
unauthorized debit Entry under the Rules when such action is prohibited
by OFAC
Example: if RDFI is in the process of an investigation of the parties named
in an IAT Entry against the OFAC SDN list and needs more time to
determine whether there is a hit or not, the RDFI may delay the transfer
of funds to or from the account until the investigation has concluded
*See Subsection 1.2.1 on page OR 1
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IAT Transaction - Formats
7 Mandatory Lines of Addenda
Batch Header
FX Codes Company Information Country Information, GO/ODFI
IAT Entry Detail
Understanding the International ACH Transaction (IAT)
GO/RDFI Addenda # RDFI Acct # Amount OFAC Screening Indicator
1 Addenda
Tran Type Code FX Amount Foreign Trace Receiver
2 Addenda
Originator Name and Address
3 Addenda
Originator City State and Country Code
4 Addenda
ODFI Name and Identification and Country Code
5 Addenda
RDFI Name and Identification and Country Code
6 Addenda
Receiver Identification and Address
7 Addenda
Receiver City State and Country Code
(8 Addenda Optional)
Remittance Information
(9 Addenda Optional)
Correspondent Information
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Corporate Originator Responsibilities
A look from the corporate Originator viewpoint for originating IATs:
 Domestic Originators should be aware that they are subject to
applicable U.S. law, including OFAC-enforced sanctions when
initiating ACH Entries
 Agreements between ODFIs and Originators should include a
statement that the Originator acknowledges that it may not initiate
ACH Entries that violate the laws of the United States
Understanding the International ACH Transaction (IAT)
 Need to develop or review your existing OFAC compliance policy
 Need familiarization with all rules related to IAT
 Need to review existing vendor, employee and pension payments for
possible IAT applications (Corporate Due Diligence)
*
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Corporate Originator Responsibilities
 Ensure that additional mandatory information is available in
company database to populate fields if IAT is required (may need
to gather additional information from customers and other
parties)
Understanding the International ACH Transaction (IAT)
 Provide JP Morgan Chase with your IAT contacts; detailed
implementation information will be provided
 Contact your payroll service provider and vendors
 Contact your Treasury Management Officer or Customer Service
Professional at JP Morgan Chase if you have any questions
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IAT Comments and Updates
 For 3rd Quarter, 2011, there were 9.53 million IAT transactions
— 9.21 million Commercial, .32 million Government
— Total Dollar value: $17.286 billion
— Ave Amt. Commercial: $1,858, Ave. Amt. Government: $528
— Return Rates: IAT Credits- 0.65%, mostly R03, R04
— Return Rates: IAT Debits- 1.81%, mostly R01, R09, R03, R04, R10
 For 4th Quarter, 2011, there were 10.41 million IAT Transactions
— 10.08 million Commercial, .33 million Government
Understanding the International ACH Transaction (IAT)
— Ave. Amt. Commercial: $1,846, Ave. Amt. Government: $543
— Return Rates: IAT Credits – 0.61%, mostly R03, R04
— Return Rates: IAT Debits - 1.58%, mostly R01, R09, R03, R04, R10
 This year so far – more PPD, WEB & TELs converted over to IAT
 There has been modest volume on false IAT hits, several IAT debits have
been rejected; few IAT credits have been blocked
 Continued Education is needed to properly format IAT transactions
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Understanding IAT
ACH Rules Amendment: IAT Entries and the Effect of Illegality
– March 16, 2012
 This amendment clarified that a Participating DFI must process each IAT
Entry in accordance with all requirements of the NACHA Operating Rules
Understanding the International ACH Transaction (IAT)
 However, a DFI is excused from its obligation to comply with specific
requirements under the Rules only when the processing of an IAT Entry
would cause the DFI to be in violation of U.S. law
 The DFI must comply with its obligations under the Rules unless it
identifies an IAT as a suspect transaction
 For domestic RDFIs that receive inbound IATs, these obligations include
the timely provision of funds and the timely transmission of Returns
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Understanding IAT
ACH Rules Amendment: Clarification of Rules Exceptions for IAT
Entries – March 16, 2012
 This amendment revised the list of provisions in the Rules (Article Two)
that do not apply to Outbound IAT Entries:
 Authorization and Notice with Respect to Consumer Accounts
 Agreement to be Bound by the Rules
Understanding the International ACH Transaction (IAT)
 Reclamation Entries and Written Demands for Payment
 Dishonor of Return by ODFI
 It clarified that certain functional processes apply to Outbound IAT Entries
only to the extent that they are supported by the laws and payment system
rules of the foreign receiving country:
 Prenotifications
 Reversing Files and Reversing Entries
 Notifications of Change
 Reinitiation of Returned Entries
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Understanding IAT
ACH Rules Amendment: Clarification of Rules Exceptions for IAT
Entries – March 16, 2012 (continued)
 It clarified that certain functional processes apply to Outbound IAT Entries
only to the extent that the Uniform Commercial Code Article 4A (UCC4A)
applies:
 Notice by ODFI to Originator for Non-consumer Credit Entries
Understanding the International ACH Transaction (IAT)
 It clarified that certain functional processes apply to Outbound IAT Entries
only to the extent that the laws and payment system rules of the foreign
origination country applies:
 ODFI and Originator action on Notification of Change (NOC)
 These sections (Article Three) do not apply to Outbound IAT Entries:
 RDFI May request Copy of Receiver’s Authorization of Entry from ODFI
 Prenotifications
 Provisions for Reclamation Entries and Written Demands for Payments
 Also – (Article Five) Gateway Action on Receipt of NOC Related to Inbound IAT
Entries now states:
 Gateway must provide corrected data within two banking days of Settlement Date of
NOC
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Understanding IAT
ACH Rules Amendment: Minimum Description Standards for
IAT Entries Clarified – September 21, 2012
 Article 3.1.5.1 - RDFI Must Provide Entry Information for Consumer
Accounts
Understanding the International ACH Transaction (IAT)
 Where it previously said “Company Name” it now says
“Company/Originator Name”
 For an ARC, BOC, POP, RCK or XCK Entry, or an IAT Entry where the
Transaction Type Code field contains a value of ‘ARC’, ‘BOC’, ‘POP’ or
‘RCK’, the Check Serial Number (if POP: must also include the
Terminal city and Terminal state as defined in Regulation E)
 Article 3.1.5.2 – RDFI Must Provide Entry Information to Receivers of ARC,
BOC, or POP Entries to Non-Consumer Accounts
 RDFI must provide or make available to a Receiver the contents of the
Check Serial Number field of an ARC, BOC, or POP Entry, or an IAT
Entry where the Transaction Type Code field contains a value of
‘ARC’, ‘BOC’ or ‘POP’ to a non-Consumer Account
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Understanding IAT
ACH Rules Amendment: Required Gateway Agreements and
Authorizations for Outbound IAT Entries – March 16, 2012 Article
Five
 Required the Gateway to have an agreement in place with either the ODFI
or its own customer (i.e., its own account holder or another party) before
transmitting Outbound IAT Entries internationally
Understanding the International ACH Transaction (IAT)
 Also required the Gateway to obtain authorization from either the ODFI or
its own customer (whichever has the agreement with the Gateway) to:
 Transmit outbound IAT Entries
 Arrange for settlement of such Entries with the Foreign Gateway
 Arrange for further transmission of such Entries to the foreign receiving
financial institution and settlement of such payments to the foreign
Receiver’s account
 And, expanded the scope of Return Reason Code R81 (Non-Participant in
IAT Program) to facilitate the return of an IAT Entry where these
required agreements/authorizations are not in place (Article Four)
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Understanding IAT
ACH Rules Amendment: Gateway Notification of Rejected Inbound
International Payment – September 21, 2012
Understanding the International ACH Transaction (IAT)
 Established a requirement that a Gateway notify the intended RDFI
when an inbound international payment has been blocked and/or
rejected because the origination of an IAT Entry for such a transaction
would violate U.S. law
 The Gateway must provide the intended RDFI with the following
minimum information from the payment transaction within five
Banking Days of blocking or rejecting the payment transaction:
 Names and complete addresses of all parties to the payment
transaction
 Amount of the payment transaction
 Date of the payment transaction
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Understanding IAT
ACH Rules Amendment: Return of Outbound IAT Entry by Foreign
Gateway – Transmission of ACH Return by Gateway to ODFI – March 16,
2012
Understanding the International ACH Transaction (IAT)
 Established a new subsection (5.1.5 Gateway Must Transmit Return
Entries for Valid Returns) within Article Five:
 A Gateway must Transmit a Return Entry for any Outbound IAT Entry
that is returned to it by the Foreign Gateway in accordance with the
foreign law or foreign payment system rules by which the Gateway is
bound
 The Gateway must Transmit the Return Entry in such a time and
manner as to be made available to the ODFI no later than the
opening of business on the second Banking Day after the Gateway’s
receipt of the valid Return from the Foreign Gateway
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Understanding IAT
ACH Rules Amendment: Identification of the Foreign Funding
Financial Institution within an IAT Entry – March 16, 2012
 The descriptions of the following fields within the Fourth IAT Addenda
Record (with Originating DFI Identification) were clarified that this
information, when contained in an Inbound IAT Entry, must identify the
foreign financial institution that provided the funding for the transaction
 Originating DFI Branch Country Code
Understanding the International ACH Transaction (IAT)
 Originating DFI Identification
 Originating DFI Identification Number Qualifier
 Originating DFI Name
 These changes eliminated the use of domestic payment system
terminology to clearly distinguish between the financial institution in the
foreign country and the U.S. Gateway, and ensured that these fields all
corresponded to the foreign financial institution funding the payment
transaction
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Understanding IAT
ACH Rules Amendment: Clarification of Originator Identification
Field – In IAT Batch Header Record - March 16, 2012
 Originators Not Established Under the Laws of a State or the U.S.
 In cases where this number exceeds 9 characters, the last 9 characters of
the account number will be used; if number has 9 or fewer characters,
then all will be used
Understanding the International ACH Transaction (IAT)
 Use of Leading Characters as Part of the Originator Identification Number
 The Rule added language to the definition of the Originator Identification
field to permit various codes to be used in the first position
 Identification of Third-Party Senders in IAT Entries
 (Since Third-Party Senders were not identified in the original IAT format)
- When the ODFI has a contractual relationship with a Third-Party Sender
rather than the Originator itself, the value of this field may identify
either the Originator or the Third-Party Sender
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Understanding IAT
ACH Rules Amendment: New Transaction Type Code to
Identify Remittances – September 21, 2012
Understanding the International ACH Transaction (IAT)
 This amendment expanded the list of code values for used within
the Transaction Type Code field in the First IAT Addenda Record to
identify international payments originated by a natural person
through a remittance product or service
 New Code is “REM”
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Understanding IAT
ACH Rules Amendment: Use of Return Code R16 to Identify
OFAC-Related Returns – March 15, 2013 (Appendix Four)
Understanding the International ACH Transaction (IAT)
 The description of R16 (Account Frozen) was revised to accommodate
the return of Entries in response to an instruction from OFAC to do so
 Since implementing IAT, NACHA has received many inquiries regarding
which Return Reason Code is appropriate for an RDFI to used to indicate
that the return of an IAT Entry was based on an instruction to do so
from OFAC – and R16 has been determined to provide the closest match
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Understanding IAT
ACH Rules Amendment: Return Reason Codes R80-R84 Clarification
of Use for Outbound IAT Entries Only – March 16, 2012
Understanding the International ACH Transaction (IAT)
 The descriptions of the Return Reason Codes R80-R84 (which are
used solely by a Gateway) were revised to clarify that these code
are applicable only to Outbound IAT Entries (Appendix Four)
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Understanding IAT
ACH Rules Amendment: Return Reason Code and Change Code for
Gateway Use with Incorrectly-Coded International Payments – March 15,
2013
Understanding the International ACH Transaction (IAT)
 Two new codes were established: one Return Reason Code and one Change
Code for use by Gateways to advise ODFIs and Originators that funds
related to a domestically–coded Entry (such as PPD, CCD, etc.) are being
moved out of the country and that the Entry should have been formatted as
an IAT Entry
 New Return Reason Code: R85 – Incorrectly Coded Outbound IAT
 New Notification of Change Code: C14 – Incorrect SEC Code for Outbound
IAT
 Prior to this implementation date, a Gateway could return such an Entry
using Return Reason Code R17 (File Record Edit Criteria) if it was unwilling
to assume the risks of processing the payment internationally without
complete information but use of R17 did not provide a clear and distinct
message to the ODFI
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Understanding IAT
ACH Rules Amendment: Corrected Data for IAT Entries – NOC
Code Descriptions – March 15, 2013
Understanding the International ACH Transaction (IAT)
 Description of Notification of Change Codes C04 (Incorrect Individual
Name/Receiving Company Name) and C09 (Incorrect Individual Identification
Number) were corrected as they relate to IAT Entries - under the “notes”
section for these codes
 For C04 Notes: IAT: For IAT Entries, the Correct Individual
Name/Receiving Company Name appears in the first 35 positions of the
Corrected Data field
 For C09 Name: Name is now Incorrect Individual Identification
Number/Incorrect Receiver Identification Number, and on C09 Notes:
IAT: For IAT Entries, the correct Receiver Identification Number appears
in the first 15 positions of the Corrected Data Field
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Understanding IAT
ACH Rules Amendment: Expansion of Return Reason Code R84
(Entry Not Processed by Gateway Operator) – March 16, 2012
Understanding the International ACH Transaction (IAT)
 The Return Reason Code R84 (Entry Not Processed by Gateway) was
broadened to accommodate a Gateway’s return of an Outbound IAT Entry
when it is unable to process the transaction because the payment system
in the foreign receiving country does not support a particular rule or
function defined as part of the domestic ACH Network
 An example is that although the U.S. ACH Network supports a process to
allow reversals of Erroneous Entries, many foreign payments systems do
not
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Understanding the International ACH Transaction (IAT)
Corporate Originator IAT Resources from NACHA*
IAT Corporate Tool Kit
 IAT for Corporate Practitioners, Executive Summary
 Sample IAT Corporate Communication to Employees and
Vendors
 Guidance for IAT Corporate Due Diligence
 IAT Payment Scenarios Simplified
 IAT FAQs for Corporate Practitioners
 IAT Equation
 Is My Transaction an IAT?
 IAT Readiness Checklist for Corporate Practitioners
 IAT Corporate Newsletter Article
 IAT Specific Data Elements
 IAT PowerPoint – IAT Overview for Corporate Practitioners
 Also NACHA’s IAT Survival Guide (3rd Edition, Chapter Eleven:
IAT Corporate Tool Kit)
* www.nacha.org
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IAT Corporate Due Diligence (as stated on NACHA’s IAT Resource Page)
 Determination of an appropriate type and degree of due diligence in
properly identifying international payments is not defined by either NACHA
or OFAC
— OFAC mandates that a company properly identify and handle a payment involving
the movement of funds internationally
— NACHA mandates proper use of Standard Entry Class Code and application of the
Understanding the International ACH Transaction (IAT)
rules based on the nature of the funds transfer and parties involved in the
payment
 As a result, the parties bound to such standards must establish business
practices that enable them to gather necessary information to comply with
those standards
 The Corporate Originator is bound to comply with NACHA rules through
their agreement with ODFI, and, in most cases the corporate Originator
knows the parties with which it does business, where those funds are
destined, where its employees reside, etc.
 As a result, Originators should generally hold the responsibility for asking
appropriate question of their vendors and employees sufficient to
determine whether those funds will remain domestic or whether the funds
will move internationally
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IAT Corporate Due Diligence (as stated on NACHA’s IAT Resource Page)
 The ODFI and its customer should work closely together to identify what
level of risk each is willing to take on regarding their compliance with
NACHA and OFAC requirements and what level of research is necessary to
meet that risk tolerance for potential violations of these rules and
regulations
 These issues should be specifically defined within the ODFI-Originator
contract
Understanding the International ACH Transaction (IAT)
 NACHA has developed some sample language for communications between
Originators and their employees and vendors, which can be found on
NACHA’s IAT Resource Page at www.nacha.org
 NACHA does not suggest that companies survey & receive responses from
every employee or vendor – rather that each company should determine
whether they have transactions being sent out of the country, develop a
specific company policy to determine how this should be addressed, and
implement that policy
 Whether the company identifies specific parties to contact or whether a
general notice is provided to all is something that needs to be determined
by each company on an individual basis
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OFAC References
OFAC Homepage:
http://www.treas.gov/offices/enforcement/ofac/index.shtml
OFAC SDN List:
http://www.treas.gov/offices/enforcement/ofac/sdn/index.shtml
Understanding the International ACH Transaction (IAT)
Recent SDN Changes:
http://www.treas.gov/offices/enforcement/ofac/sdn/index.shtml
Downloadable SDN List:
http://www.treas.gov/offices/enforcement/ofac/sdn/index.shtml
OFAC FAQs:
http://www.treas.gov/offices/enforcement/ofac/faq/index.shtml
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Understanding the International ACH Transaction (IAT)
Questions/Comments
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JPMorgan Chase Contact
 Beth Anne Hastings
 JPMorgan Treasury Services, ACH Product Mgr.
 Phone 312-954-2649
Understanding the International ACH Transaction (IAT)
 Bethanne.a.hastings@jpmchase.com
www.jpmorganchase.com/ts
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Understanding IAT
 Additional Resources
 www.nacha.org
 www.nacha.org/corporate_payments
 http://ecc.nacha.org/
Understanding the International ACH Transaction (IAT)
 www.epaynetwork.com
 www.afponline.org
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