Effective September 18, 2009, NACHA Operating Rules 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 also requires that IAT payments include specific data elements defined by the Bank Secrecy ACT's (BSA) "Travel Rule."

 

Receiving Depository Financial Institutions (RDFIs)

An estimated 40 million ACH transactions annually that are currently being earmarked "domestic" may be reformatted as "international" beginning September 18. All RDFIs have the potential, and the likelihood, of receiving these transactions and should be performing three key tasks to prepare for IAT:

1. Conduct testing with the credit union's data processor to ensure that it can accept the new IAT Standard Entry Class Code and that it can comply with Regulation E reporting requirements on member statements.
2. Develop a written OFAC policy and procedures manual that includes IAT procedures.
3. Train appropriate staff to handle IAT in compliance with OFAC regulations

 

It is each credit union's responsibility to ensure IAT preparedness and OFAC compliance. Southwest Corporate cannot complete this process for credit unions.

 

Originating Depository Financial Institutions (ODFIs)

Through Southwest Corporate's ACH origination system, members can send credits to financial institutions in Canada, Mexico, Germany and England.

• The Federal Reserve Bank (FRB) has established ACH exchange and conversion relationships in those countries.
• The ACH is a proven payment system.
• Southwest Corporate's ACH origination service creates International transactions - a feature not available in all ACH systems.
• The credit union's cost to send the payment is minimal:
• Southwest Corporate's origination fee is $0.06 with volume discounts
• The FRB charges a $0.67 surcharge to Mexico and $0.62 to Canada.
• Debits can be sent to Canada.
• Transactions settle in the receiving country within two business days.

 

Many credit union SEGs are located in other countries or have employees in other countries. Credit unions can send payroll, loan proceeds and other payments securely, predictably and at minimal cost through the ACH system.

• The credit union originates the transactions in NACHA format.
• Transactions are sent in the same file as domestic transactions.
• The FRB's partners convert the items to the receiving country's format.
• The FRB publishes competitive foreign exchange rates daily on a convenient website.
• Transactions are originated in U.S. dollars and settled in U.S. dollars.
• No fees are deducted from the payment in the receiving country.

 

NACHA and the Federal Reserve are working with financial institutions around the world, including Africa and Asia, to add more countries to which payments can be sent via the ACH.

 

To put this service to work for your credit union, email an Account Executive at contactus@swcorp.org or call 800.442.5763.