Payment Systems
Latest Update on International ACH Transactions (IAT)
The following information represents an overview related to the implementation
of IAT:
IAT Purpose
In today's environment, international ACH transactions (IAT) are regularly introduced into the ACH Network by financial institutions using domestic standard entry class (SEC) codes, such as PPD or CCD. The RDFI is unable to identify these transactions as international items and, therefore, unable to perform adequate OFAC review. OFAC requested that NACHA add information to the ACH record to permit adequate scrutiny of transactions for OFAC compliance.
Information currently included within the cross-border payment formats, CBR and PBR, is not sufficient to allow an RDFI to readily identify all parties to an international transaction. The new IAT format, effective Sept. 18, carries additional BSA "Travel Rule" information in seven addenda records and OFAC screening indicators in the entry detail record.
Project Status
WesCorp's IAT project is running on schedule. Coding is nearly complete; final development of Panama payment initiation templates and programming to rescan warehouse transactions for OFAC compliance is underway. Quality assurance (QA) and regression testing are underway and should wrap up by the end of March. User acceptance testing (UAT) will begin in April and conclude in May. Implementation of IAT code is anticipated for July, which will allow us to monitor the system until Sept. 18 when IAT functionality is officially "turned on."
Agreements
Your credit union is urged to review the agreements you have with your members.
Files
Your credit union will have the option of receiving IAT items in a separate ACH file or combined with other SEC codes, including IAT return items. You will be able to designate your preference on a revised ACH Services set-up form. If you do not designate a preference, you will receive combined IAT and other SEC code transaction files.
Reports
The existing C10 and C10R reports will include unformatted IAT data after Sept. 18. A new C10IAT report has been developed to reflect both IAT receipt and return information in formatted fashion. All originated items will continue to be reflected on the C03 report.
OFAC Checking
The information provided today for CBR/PBR is very limited, so the ACH Services application will start fresh with the false-positive table for IAT transactions. The Gateway Operator (GO) will optionally screen receipt activity and populate the first field called Gateway Operator OFAC Screening Indicator. ACH Services screens all incoming items and populates the second field, Secondary OFAC Screening Indicator. ACH Services is utilizing the JAVA FACFilter application provided by Accuity to perform OFAC checks on international ACH transactions.
OFAC Screening Responsibilities
All ODFIs and RDFIs are responsible for OFAC compliance. Although ACH Services provides an OFAC filter, OFAC makes it clear that a financial institution cannot contract away its liability for OFAC compliance.
Testing Cycle
In May, your credit union will be able to originate IAT transactions in the training region. Receipt test files will also be available in the training region, at which time instructions and forms necessary for testing will be provided. Data processors and data communication users will have the ability to test/process files in the training region as well. We do not intend to provide credit union-specific test data for every credit union on the system; however, instructions will include tips for editing the generic test files.
Template Functionality
Because the new IAT format requires much more information than the CBR/PBR format it replaces, we are unable to map existing CBR/PBR template information to IAT templates. Therefore, you will be required to create IAT templates "from scratch." The new IAT templates can be created prior to Sept. 18. Templates can accommodate multiple transactions.
Resources
The following Web sites and materials will be helpful as you prepare to roll out IAT to your members:
NACHA - IAT Industry Information
IAT Frequently Asked Questions (FAQs)
ACH Payment Scenarios: Domestic or International
Inbound IAT Debit Processing Guidance
IAT Survival Guide (available for purchase)
Regional Payments Associations
WesCorp's Member Center
IAT Webcast
IAT Readiness Checklists
Operational Updates