By Maria Bruno-Britz, Bank Systems & Technology
The world of payments just got a tad less confusing, thanks to NACHA, the Herdon, Va.-based payments organization. Effective March 20, 2009, all international payments made via the ACH Network will be identified as International ACH Transactions using a new Standard Entry Class (SEC) Code-IAT. The new rule will also require that IAT payments include specific data elements defined by the Bank Secrecy Act's (BSA) Travel Rule.According to NACHA, there are international ACH payments that receiving depository financial institutions cannot identify. Many payments initiated internationally enter the U.S. ACH Network through correspondent banking relationships. As a result, a number of international payments are formatted as domestic transactions, making it difficult for depository financial institutions to identify these transactions to comply with U.S. law. The new rule will identify International ACH Transactions (IATs) by focusing on where the financial agency that handles the payment transaction is located. As such, certain transactions currently formatted as domestic transactions, but are international transactions, will be sent as IATs.
NACHA says the new ruling will help banks comply with BSA regulations since the new ACH standard requires more specific documentation to accompany each payment, per the BSA Travel Rule. This data include, Originator name, address, account number; Originator's depository institution name and payment amount; Receiver name, address, account number; and the Receiver's financial institution). As a result, depository institutions should find it easier to comply with OFAC guidance.
Furthermore, NACHA says as a side benefit to the rule banks will be able to distinguish between consumer and business ACH transactions. The amendment will also make the U.S. ACH Network formats more consistent with other network formats, such as wire transfer formats, that currently carry the "Travel Rule" information to comply with BSA. The change is also consistent with the field lengths in SWIFT formats to ensure efficient mapping of data.