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Effective September 19, 2009, an amendment to NACHA’s Operating Rules (Rules) becomes effective, is your credit union preparing?
If your credit union originates or receives ACH transactions, then you should have already received a recent communication from Members United explaining these important Rule amendments. However, below are some Q&As which we are pleased to offer our members to help them prepare for when these Rule amendments become effective in March.
| Why did NACHA make an amendment to the Operating Rules? |
| NACHA—the electronic payments association—announced its amendment to facilitate compliance with the Office of Foreign Assets Control (OFAC) regulations. Specifically, it will soon require every ACH payment entering or exiting the United States to be identified and formatted as an International ACH Transaction, often referred to as an IAT. Each IAT must be reviewed for OFAC compliance. |
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| Why is NACHA aligning with OFAC obligations? |
| OFAC requires credit unions and others to reject transactions involving any country, entity, or individual on OFAC’s Specially Designated Nationals and Blocked Persons list. The new Rules are designed to improve institutions’ ability to identify all international payments flowing through the ACH network. |
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| What exactly is an IAT? |
| An IAT (International ACH Transaction) is defined as a debit or credit entry that is part of a payment transaction involving a financial institution’s office that is not located in the territorial jurisdiction of the United States. |
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| Who is impacted by this change? |
| All U.S. financial institutions, data processors and third party processors are impacted, including financial institutions that do not currently send or receive international ACH payments because they may potentially receive an IAT transaction. |
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| What should my credit union be doing? |
We recommend the following:
- Familiarize yourself with the new ACH Rules related to IAT and educate appropriate staff accordingly.
- Develop and implement an ACH OFAC compliance policy for both origination and receipt of IAT transactions. Also develop procedures for daily processing of IAT transactions and OFAC monitoring.
- Contact your vendors to ensure your data processing and OFAC monitoring systems can accept the new processing requirements, and can provide ACH detail information on your member account statements.
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| Where can I obtain additional information, and how can Members United assist me? |
You can visit www.nacha.org/IAT_Industry_Information for additional information.
A. In addition, Members United will also help you with:
- Providing secondary OFAC screening on all inbound and outbound IATs. (Note: Your credit union is ultimately responsible for its OFAC due diligence.)
- Continuing to provide full ACH receipt file, including all addenda fields, for posting to your data processing system.
- Staff training on the new IAT code. Please visit www.membersunited.org, under Events, Education/Training, for information about our upcoming International ACH Transactions (IAT) Readiness webinars.
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