New definition of an International ACH Transaction (IAT):

Effective September 18, 2009, the Office of Foreign Assets Control (OFAC), which is an agency of the US Treasury Department, will require tighter controls over all international ACH payments.  This requirement is related to the desire to better monitor possible terrorist and/or money laundering activities.  Consequently, NACHA has created a new series of formats, data requirements and a new IAT definition.

Under the new rules, an IAT will be re-defined by NACHA as follows:
"International ACH Transaction or IAT entry (Definition effective 9-18-09) - means a debit or credit Entry that is part of a payment transaction involving a financial agency’s (bank's) office that is not located in the territorial jurisdiction of the United States.

For purposes of this definition, a financial agency means an entity that is authorized by applicable law to accept deposits or is in the business of issuing money orders or transferring funds. An office of a financial agency is involved in the payment transaction if it (1) holds an account that is credited or debited as part of the payment transaction; (2) receives payment directly from a Person or makes payment directly to a Person as part of the payment transaction; or (3) serves as an intermediary in the settlement of any part of the payment transaction. IAT entries must be originated using the IAT Standard Entry Class Code."

Based on the above new IAT definition, any ACH payment that includes funds that at anytime were moved from a foreign financial agency (foreign bank or money transmitter) must satisfy the new IAT requirements,  regardless of whether the payments (such as direct deposits) are to accounts within or outside of U.S. borders.

ADP is working with NACHA and the banking community to implement the changes required.  To find out more about IAT and how it may impact your company, including when IAT is required, you can visit the IAT section of the NACHA website at www.nacha.org.