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International Automated Clearing House (IAT)

On September 18, 2009, the NACHA Operating Rules will put into effect an amendment that has the potential to impact most U.S. businesses that send or receive ACH payments. A new ACH Standard Entry Class code for International ACH (IAT) will take effect through the Automated Clearing House (ACH) system. Please see the below information for further clarification regarding upcoming changes.

As a corporation originating ACH payroll transactions for employees, is there anything I need to do for this change? A corporation should have procedures in place to notify employees about IAT and inquire if they are sending their paycheck out of the country. The following language is a sample. This language can be posted on an employee website, in a monthly newsletter or other employee communications. The same questions should be asked to all new employees.

• There have been recent changes to the payment system rules for direct deposit of payroll. If you receive your payroll via direct deposit at a U.S. bank and then have the entire payroll amount forwarded to a bank in another country please advise the payroll department (or specific individual within your company). There are new formatting requirements for these transactions that the company needs to follow.

Frequently Asked Questions

1. What is an International ACH Transaction (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 any part of the transaction will be processed using the ACH Network.
   
   
2. Why was IAT developed?  The IAT was developed in response to a request from the Office of Foreign Asset Control (OFAC). OFAC has requested that NACHA modify the NACHA Operating Rules to adequately identify international transactions and have banks review these transactions for OFAC compliance.
   
   
3. As a corporate originator and/or receiver of ACH, do I have Office of Foreign Assets Control (OFAC) responsibilities?  ACH receivers and originators are subject to U.S. law, including OFAC sanctions.  The originating company acknowledges that they may not initiate ACH entries that violate the laws of the United States. 
   
   
4. How do I know if the IAT applies to my transactions?
   
   • Is your company a subsidiary of a multi-national company?
   • Does your organization have foreign subsidiaries?
   • Does your organization buy from or sell to companies or individuals outside the territorial jurisdiction of the United States?
   • Does your organization send payroll, pension or benefit payments via the ACH Network to individuals that have permanent resident addresses outside the territorial jurisdiction of the United States?
     
     

If you answered yes to any of these questions, you may be required to comply with the new IAT Rules.

Where can I get more information about IAT rules?
NACHA - http://www.nacha.org/IAT_Industry_Information/
OFAC - http://www.treas.gov/ofac