What Will Change With FedACH® International ACH Transaction (IAT)?

The implementation of IAT will bring a number of changes, including redefined obligations for gateway operators, the addition of the travel rule information and SEC code changes.

Gateway OperatorRedefined as any depository financial institution (DFI) or ACH Operator that acts as the entry point to, or exit point from, the U.S. Depository financial institutions. Obligations

Article Eleven in the NACHA Operating Rules redefines the role of a gateway operator for international transactions. General obligations include: (1) authorization from an ODFI to originate IAT entries; (2) agreement between an ODFI and the gateway operator; and (3) an obligation for the gateway operator to comply with U.S. laws and regulations. Additionally, the new rule removes the current requirement for formal declaration of gateway operator status and allows a gateway operator to be any U.S. depository financial institution (DFI) or ACH operator. 

ACH Operator Acting as a Gateway Operator

An ACH Operator acting as a gateway operator will be required to restrict inbound IAT entries to ACH credits only, with the exception of reversing debits. Outbound IAT entries processed through an ACH Operator acting as a gateway operator can be either credits or debits.

U.S. DFI Acting as a Gateway Operator

DFIs acting as gateway operators may originate both credit and debit entries, inbound and outbound. A DFI acting as a gateway operator within the United States will also assume the responsibilities and warranties for IAT entries and ensure all ACH files are processed within OFAC guidelines.

Travel Rule Information

The additional information required in the IAT format by the travel rule ensures that specific information is provided with each payment, including the identity of all parties to the transaction. Each transaction must include the following information:

  1. Name and physical address of the originator
  2. Name and physical address of the receiver (beneficiary)
  3. Originating bank name, identification number and branch country code
  4. Correspondent bank name, identification number and branch country code (if applicable)
  5. Receiving bank name, identification number and branch country code
  6. Reason for the payment

This information enables an RDFI to easily identify the transaction’s origins and to ensure it meets the existing requirements for file processing and adherence to its compliance policies.

SEC Code Changes

Implementation of IAT will eliminate the CBR and PBR SEC codes. Overlap of the CBR and PBR codes will be allowed for return and notification of change NOCNOC entries are created by a receiving depository financial institution and sent back to the company requestor via its depository financial institution. NOC entries allow the receiving financial institution to send correcting information without having to return the value of the payment. items only until September 18, 2009.

Next Steps

Now that you have reviewed the basic information about IAT, you are ready to delve deeper into how these changes can help your institution integrate its payments business into the growing global economy.
 
Please choose the description that best fits your organization to learn how IAT will impact your institution:

I am a depository financial institution:            

Training Resources

To learn more, listen below to a three part presentation on "Understanding New Requirements in the ACH Network: International ACH Transaction IAT," presented by Elena Whisler and John Morris from the Retail Payments Office at the Federal Reserve Bank of Atlanta. The information is provided in an audio format with corresponding slides for each section. To help you follow along, we recommend you first open the presentation slides prior to clicking on the corresponding audio:

Under the new IAT SEC code, the Federal Reserve Banks will play an important role, both as an ACH Operator and a Gateway Operator. To learn more, about this dual role please see the below presentation.

Additional Resources

Do you still have questions? Please review the Frequently Asked Questions document for commonly asked questions about IAT. You may also contact us t to submit a question not found on the FAQs and will receive an email response regarding your inquiry.

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For more information about FedGlobalSM Services or IAT, visit the service offerings pages , contact your FedACH Sales Specialist or contact us now and receive an email response to your immediate questions.

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