New ACH Network Code for International Payment Processing

IAT is the new ACH network code for international ACH transactions. IAT standard class entry (SEC) code replace the CBR and PBR SEC codes that are currently in use today. Effective September 18, 2009, all consumer and corporate international transactions made via the ACH Network will be required to use the IAT SEC code.

The purpose of the IAT is to simplify identifying of identifying international transactions and assuring that such transactions include specific data elements required by the Bank Secrecy Act’s (BSA) “Travel Rule” and make compliance with OFAC rules easier. IAT was developed to respond to OFAC’s request to align the NACHA Rules with OFAC compliance obligations and to make it easier for RDFIs to comply with those obligations.

In the current environment, many U.S. financial institutions are receiving international payments that cannot be properly identified. These unidentifiable payments enter the U.S. through correspondent banking relationships and are often difficult to trace or accurately process as international payments. The new IAT code supports the end of anonymity and promotes traceability of international electronic payments.

The introduction of the IAT code impacts all U.S. financial institutions, including those that do not currently send or receive international payments as any financial institution is a potential receiver of an IAT transaction.