International ACH Transaction (IAT)

New Automated Clearing House (ACH) Rules May Impact You

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.

Why the change was needed
Even though BBVA Compass does not currently offer cross-border ACH transactions, some domestic transactions may be directly funded from outside the U.S. or forwarded to people outside the U.S.

Currently, there are internationally funded payments that are originated into the U.S. ACH network that cannot 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. This is very similar to what we currently do for all incoming and outgoing wire transfers.

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.

How you may be 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.

What it means for you