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International ACH Transactions

Beginning September 18, 2009, an amendment to the NACHA Operating Rules will require all payments funded internationally or sent to another country via the ACH Network to be identified as International ACH Transactions using a new Standard Entry Class (SEC) Code – IAT.

How do I know if IAT applies to my ACH transactions?
If you answer yes to any of the following questions, you may be affected and should review NACHA’s website:
  • Is your company a subsidiary of a multi-national company?
  • Does your company have foreign subsidiaries?
  • Does your company buy or sell to organizations or individuals outside the territorial jurisdiction of the United States?
  • Does your company send payroll, pension or benefit payments via the ACH Network to individuals that have permanent resident addresses outside the territorial jurisdiction of the United States?
How should my company prepare?
  • Familiarize yourself with new NACHA rules related to international ACH transactions.
  • Review existing vendor, employee and pension payments to determine if new IAT rules apply to transactions.
  • Ensure that your organization has the capacity to capture and provide required information to process international transactions under the new rules.
Our ACH activity meets the IAT criteria — what’s the next step?
If you determine that your ACH activity meets the IAT criteria, you will need to include the following information in the new IAT format as of September 18, 2009.
  • Name and physical address of originator
  • Name, physical address and account number of receiver 
  • Originating bank identifying information
  • Intermediary bank identifying information
  • Receiver bank identifying information
  • Reason for payment
Why was this rule developed?
Changes to the ACH formats and rules for cross-border payments were made in response to the request of the Office of Foreign Assets Control (OFAC). OFAC understands that there are currently transactions flowing through the Network that are funded by international sources. These transactions cannot currently be identified within the Network and are formatted as domestic transactions. OFAC has requested that NACHA modify the NACHA Operating Rules to adequately identify international transactions and have the banks review the international transactions for OFAC compliance.

Can I opt out?
No, if the ACH entries you originate meet the IAT criteria, you are required to use the IAT Standard Entry Class code and include the additional information required to comply with the new rule.

What if we do nothing?
Corporate originators could have their ACH origination capabilities suspended and/or removed. Additional penalties for OFAC non-compliance can include fines ranging from $10,000 - $10,000,000 per occurrence

What additional resources are available on IAT?
Visit NACHA’s website for the IAT Corporate Toolkit with detailed information, FAQs and scenarios. Additionally, any of our Business Services bankers can help you prepare for the rule change:

Columbia, Missouri - Tom Schwarz - (573) 441-2872
Southern Missouri - Becky Martin - (417) 967-4541, ext. 5529
Oklahoma/Texas - Susie Suther - (580) 795-3959, ext. 4337
 
 
 
 
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