International ACH Transactions
Effective Sept. 18, 2009, the National Automated Clearing House Association requires a new format for certain ACH transactions. ACH transactions that are part of a payment chain that begins or ends in another country outside the U.S. must be formatted as a new ACH transaction type, IAT. Transactions that begin as ACH payments destined for other countries will also be classified as IAT transactions. Please note that this change does not affect international wire transfers.
The new IAT format is designed to help law enforcement agencies detect, investigate and prosecute money laundering and other financial crimes by creating and preserving an information trail of entities sending and receiving funds through U.S. financial institutions' monetary systems.
The U.S. Department of Treasury - Office of Foreign Asset Control requires that the financial industry provide certain information regarding funds entering and exiting the United States. See "foreign asset control regulations for the financial community" on the U.S. Department of Treasury OFAC website.
The National Automated Clearing House Association governs financial transactions that flow through ACH. As the governing body, they issue rules for all parties to ACH transactions. In order to comply with OFAC, NACHA requires parties involved in electronic transfer of funds through ACH to report information to them via ACH file. The state is a party, as we transmit payroll direct deposits through ACH. ACH transactions that are part of a payment chain that begins or ends in a financial institution outside of the U.S. must be formatted as an International ACH Transaction.