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NEWS RELEASE
NACHA VOTING
MEMBERSHIP APPROVES
INTERNATIONAL ACH TRANSACTIONS BALLOT
Implementation Date—March
20, 2009
Herndon,
Virginia, August 15, 2007 - On August 14,
2007, the NACHA voting membership approved an
amendment to the NACHA Operating Rules that
will require all international payments made via the
ACH Network to 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 Rule1.”
The implementation date of the rule amendment is
March 20, 2009.
“The new Rule
is an act of industry self-regulation that will
assist the federal government in achieving its
public policy goals,” explains Priscilla Holland,
Senior Director of Network Development at NACHA. “It
will also enable financial institutions to easily
identify all international payments flowing through
the ACH Network and all parties involved in the
transactions, making it easier to comply with U.S.
law.”
Currently, there
are international ACH payments that Receiving
Depository Financial Institutions (RDFIs) cannot
identify. Many payments initiated internationally
enter the U.S. ACH Network through correspondent
banking relationships. Consequently, a number of
international payments are formatted as domestic
transactions, making it difficult for Depository
Financial Institutions (DFIs) to identify these
transactions for purposes of complying with U.S.
law.
The new Rule
will identify International ACH Transactions by
focusing on where the financial agency that handles
the payment transaction is located. Thus, certain
transactions currently formatted as domestic
transactions, but are international transactions,
will be sent as IATs.
The identification
of these payments as international transactions and
the inclusion of the “Travel Rule” information
(i.e., Originator name, address, account number;
Originator’s depository institution name and payment
amount; Receiver name, address, account number; and
the Receiver’s financial institution) will make it
easier for RDFIs to comply with OFAC-sanctioned
guidance.
“Financial
institutions have a responsibility to help safeguard
the U.S. financial system from abuses involving
international payments,” says Holland.
While financial
institutions can rely on each other for compliance
to U.S. law in the domestic payment environment,
DFIs cannot rely on international counterparts to
comply with OFAC-sanctioned examination procedures,
included in the Federal Financial Institutions
Examination Council’s (FFIEC) Bank Secrecy
Act/Anti-Money Laundering Examination Manual.
Implementation of
the new SEC code provides additional benefits. The
majority of ACH systems around the world do not
distinguish between payments transmitted to consumer
and business accounts. The IAT Standard Entry Class
(SEC) Code will enhance Network processing
efficiencies and enable accurate mapping of data
between domestic and international payment systems.
The amendment will
also make the U.S. ACH Network formats more
consistent with other network formats. For example,
wire transfer formats 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.
NACHA will develop
and release educational materials for ACH Network
participants prior to implementation.
About the ACH
Network and NACHA - The Electronic Payments
Association
The Automated Clearing House (ACH) Network
facilitates commerce, electronically, by serving as
an efficient, reliable and secure payments system.
NACHA, led by member depository financial
institutions and payments associations, fulfills
this purpose by managing the development,
administration, and governance of the ACH Network,
and by providing superior services and value to its
members as the industry association responsible for
ACH payments. NACHA represents more than 11,000
financial institutions through direct memberships
and a network of regional payments associations, and
650 organizations through its industry councils.
Visit NACHA on the Internet at
www.nacha.org.
131 C.F.R.
103.33(g)
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