Request For Comment - International ACH Transactions (IAT) and Related Topics
Nacha is issuing for comment five specific proposals to amend the Rules on International ACH Transactions (IAT), in addition to two related proposals that establish a distinct Return Reason Code for OFAC-specific returns and clarify the use of valid characters within all ACH records (regardless of SEC Code):
- Revise the definition of IAT.
- Eliminate the restriction on IATs for same-day processing.
- Enable the optional inclusion of Date of Birth in the IAT format using optional fields.
- Allow identification of foreign source or foreign destination of funds from non-traditional financial institutions.
- Require financial institutions to register an IAT contact in the ACH Contact Database.
- Define valid characters for ACH Records.
- Establish a Return Reason Code (R90) to specifically designate when a return is processed per OFAC instructions.
Additionally, Nacha is requesting comment on ten specific “IAT/not IAT” scenarios to be added to the Nacha Operating Guidelines related to e-commerce marketplace processing.
These topics have been compiled for a single Request for Comment on IAT Topics. Responses on these proposed changes are requested by May 30, 2025.
Please review the survey questions prior to beginning your response so that you can gather information and comments from all impacted areas of your organization before responding to the questions. You can download the materials on the left side of the page and respond online.
Please use this link to the Participant Survey if you are employed by or responding on behalf of a small/medium business, corporate, state/local government, charitable or religious organization, or higher education institution (or enrolled student). (surveymonkey link).
Please use this link for all other respondents including financial institutions, Payments Associations and other industry associations, and organizations that offer solutions, products or services to enable or support payments as its primary line of business. (surveymonkey link).
Download materials: Executive summary, Presentation, Proposed Modifications to the Rules, ACH Participant survey, Stand-alone IAT E-Commerce Marketplace scenarios
We have a video to help walk you through all seven proposals in the Request for Comment, including what each proposal means, what the potential impacts are, and a look at the anticipated benefits. You can watch it on Nacha's YouTube Channel.
Additionally, we have a video focusing specifically on scenarios where there’s a question of whether a transaction is—or is not—an IAT. This video is also available on Nacha’s YouTube channel.
Details
Definition of IAT Entries
This proposal would replace the existing definition of IAT with the following:
“An IAT Entry is the U.S. ACH Network component of an international payment transaction that moves money into or out of the jurisdiction of the United States.
For purposes of this definition, an international payment transaction is the totality of all the steps that are used to effect the transfer of funds from a payer to a payee into or out of the jurisdiction of the United States. An IAT Entry is used for the domestic component of the international payment. An International ACH Transaction cannot be a Same Day Entry.”
- This proposed definition eliminates references to other defined terms: Inbound; Outbound; Financial Agency; Person.
- The related definition of Financial Agency would be deleted, as its use is limited to the existing definition of IAT.
- IAT eligibility for Same Day ACH is being proposed separately. Corresponding language changes would be made if approved.
Eligibility of IAT Entries for Same-Day Processing
Inbound IAT credits with a same-day settlement would need to meet funds availability requirements.
- An exclusion exists in the Rules (Article One, Subsection 1.2.1 Effect of Illegality) to allow for delay in providing funds availability related to clearing potential OFAC matches.
- To meet the conditions for this exclusion, the delay must be due to time needed for clearing potential matches, not due to a lack of review.
- Same-day IAT credit entries that do not result in an exception in the OFAC review process would need to meet funds availability requirements (Article Three, Subsection 3.3.1.2 - Availability of Credits That Are Same Day Entries).
- Both ACH Operators offer the ability to deliver IAT entries to RDFIs in a separate file from all other ACH entries.
- May streamline RDFI processing by eliminating the need to segregate IAT Entries from other ACH Entries upon receipt.
Date of Birth Field for IAT Entries
Industry participants report that the most requested piece of information to resolve IAT exceptions is the Date of Birth (DoB) for the party identified as a potential match in compliance screening.
- Industry input indicates that potentially 20% of received IATs must be reviewed manually for potential matches.
- This proposal would provide an optional field for the known DoB of a natural person sender and/or receiver of an IAT Entry.
- Other initiatives to support exchange of information related to IAT exceptions:
- ACH Contact Registry (who to contact)
- The registry currently includes the ability to voluntarily list IAT/OFAC-related contacts.
- A separate proposal would require FIs to list IAT-specific contacts.
- Other ways to standardize, streamline and/or consolidate methods of FI information exchange:
- Secure Messaging
- Trusted-party API data exchange
- ACH Contact Registry (who to contact)
Non-Bank Financial Agencies in IAT
This proposal expands several field descriptions that identify the Originating and Receiving DFIs in an IAT Entry to recognize the possibility that the financial agency outside the U.S. is a non-traditional account-holding institution or organization.
- Expands existing references to bank or financial institution to include a generic reference to financial agency.
- Incorporates an “other” option in the types of codes used to classify the financial agency’s identification number.
Registration of IAT Contacts
This proposal would require a Participating DFI to register their IAT handling contact with either:
- The name, title, email address, and phone number for at least one primary and one secondary contact person for the area of responsibility. Or
- Department contact information that includes an email address and a working telephone number.
Phone numbers and email addresses must be those that are monitored and answered during normal business hours for financial institution inquiries.
These are the existing requirements for mandatory contact registration fields (ACH Operations and Fraud/Risk Management) today.
Valid Characters for ACH Records
The purpose of this proposal is to clarify the data specifications for ACH Record Valid Characters, identifying specific acceptable characters rather than utilizing references to standards that may be open to interpretation.
While this proposal impacts all types of ACH entries using all SEC Codes, it is being included in this RFC as the subject was originally raised by the IAT Industry Work Group and can bring benefit to many types of ACH participants.
This proposal is intended to address issues identified with current rule language for ACH Valid Characters:
- Current rules allow ASCII characters above hex 1F and EBCDIC above hex 3F; however, there is not consistency for character translation of some of those hex codes.
- Parties not using legacy mainframe for processing increasingly use extended character sets.
- UTF-8 uses leading bytes and continuation bytes to allow for many more than 256 characters; however, this requires more than one byte per character and may cause the ACH Operator to reject files if any record does not have precisely 94 bytes.
New Return Reason Code for Entry Returned Per OFAC Instruction
This proposal would designate a new return reason code, R90, for use by an RDFI or Gateway for entries returned per OFAC instruction.
Examples of use include:
- Inbound debit IAT Entry- RDFI (not a Gateway) receives an inbound debit IAT Entry. The compliance review indicates a match for a party on the sending side. OFAC instructs the RDFI to capture the funds.
- When the IAT Entry settles with the ACH Operator, the funds will have been debited from the RDFI’s settlement account and credited to the ODFI/Gateway’s settlement account.
- To fulfill OFAC’s instructions, the RDFI would capture the funds from the receiving account, place them in suspense, and return the debit IAT Entry as R90 to recoup the funds from the ODFI/Gateway and communicate the reason why.
- Outbound debit IAT Entry – RDFI/Gateway receives an outbound debit IAT Entry. The compliance review indicates a match for a party on the receiving side. OFAC instructs the RDFI/Gateway to capture the funds.
- When the IAT Entry settles with the ACH Operator, the funds will have been debited from the RDFI/Gateway’s settlement account and credited to the ODFI’s settlement account.
- To fulfill OFAC’s instructions, the RDFI/Gateway would capture the funds from the receiving account, place them in suspense, and return the debit IAT Entry as R90 to recoup the funds from the ODFI and communicate the reason why.
- In the unlikely instance that OFAC instructs the return of a domestic ACH Entry, R90 would be used in a similar fashion as described above.
Technical
The following are the changes to the Nacha Operating Rules language to affect these proposals:
Definition of IAT Entries
This topic has a proposed effective date of September 18, 2026.
In addition to the proposed definition of IAT (Article Eight Section 8.55), other rule language would be adjusted to incorporate the new language:
- Subsection 2.5.8.1 General Rule
- Aligns general rule language for IAT Entries to incorporate the proposed IAT definition.
- Appendix Three Subpart 3.2.2 Glossary of Data Elements – Standard Entry Class Code
- Updates the IAT SEC Code description to align with the proposed IAT definition.
- Article Eight, Section 8.44 – “Financial Agency”
- Removes the formal definition of a Financial Agency.
- Article Eight, Section 8.45 – “Foreign Correspondent Bank”
- Revises the reference to Financial Agency, as defined, to adopt a more generic use of the term “financial agency”.
Eligibility of IAT Entries for Same-Day Processing
This topic has a proposed effective date of March 19, 2027.
Under this proposal, the Rules language related to IAT Entries, Same Day Entries, and the Settlement Date of entries would be updated to remove references excluding IAT entries from same-day processing and settlement.
- Subsection 2.5.8.1 General Rule
- Removes ‘An IAT Entry cannot be a Same Day Entry.’
- Section 8.55 “International ACH Transaction” or “IAT Entry” or “IAT”
- Removes ‘An IAT Entry cannot be a Same Day Entry.’
- Appendix Three SUBPART 3.2.2 Glossary of Data Elements – Settlement Date
- Updates the situations in which the Receiving ACH Operator will insert the Banking Day following the Banking Day of processing as the Settlement Date (i.e., the next Banking Day).
Date of Birth Field for IAT Entries
This topic has a proposed effective date of March 19, 2027.
Reserved space in the addenda records would be allocated for the optional inclusion of the DoB for the sender, receiver, and, for split transactions, the ultimate beneficiary or payor.
The fields would be designated as Optional for use by the Originator (that is, not edited by ACH Operator), as there would be no content if not elected to be used, or if sender or receiver is not a natural person.
- Appendix Three, SUBPART 3.1.12 - Sequence of Records for IAT Entries
- This proposed change re-purposes currently-reserved spaces 74-83 within the Third and Seventh IAT Addenda Records.
- Appendix Three, SUBPART 3.2.2 - Glossary of Data Elements
- Adds Originator Date of Birth and Receiver Date of Birth to the listing of data elements.
- Updates Payment Related Information to permit the inclusion of Date of Birth for the ultimate beneficiary or payor.
Non-Bank Financial Agencies in IAT Entries
This topic has a proposed effective date of March 19, 2027.
The Request for Comment proposes expanding the following field descriptions to accommodate the identification of a non-traditional account holding institution in an IAT Entry:
Appendix Three Subpart 3.2.2 (Glossary of Data Elements):
- Descriptions of these fields would be expanded to include generic references to "financial agency:"
- Originating DFI Name (Inbound/Outbound IAT)
- Receiving DFI Name (Outbound IAT)
- Originating DFI Identification (Inbound/Outbound IAT)
- Receiving DFI Identification (Outbound IAT)
- Originating DFI Branch Country Code
- Receiving DFI Branch Country Code
- Receiving and Originating DFI Identification Number Qualifier 2-digit code values would be supplemented with an alternative organization type: ("03 – Other").
- Note: The existing identifier value "03 IBAN" will be deleted. Because IBAN identifies an account number format rather than a financial institution numbering scheme, it does not apply to this field.
Registration of IAT Contacts
This topic has a proposed effective date of September 18, 2026.
Under this proposal, Section 1.14 (Participating DFI Contact Registration) would be updated within the first paragraph to include (c) International ACH Transaction (IAT Entry) handling, in addition to the existing (a) ACH operations; and (b) fraud and/or risk management.
- All existing requirements would apply to all contact types including:
- Information required for registration.
- Update and verification requirements.
- Information to be used internally only by permissive parties.
Further, Section 1.14 regarding provision of information via secure means only to registered Participating DFIs, ACH Operators and PAs, and use by Nacha, would be updated to include allowance for purposes of addressing ACH operational issues, fraud and risk management, and IAT handling within the ACH Network.
Valid Characters for ACH Records
This topic has a proposed effective date of March 19, 2027.
The proposed rule change would update Appendix One, Part 1.2 (Data Specifications for ACH Records) to replace EBCDIC and ASCII value references to specific valid characters identified in the Nacha Operation Guidelines.
These data specifications apply to ACH Records related to all Entries, regardless of SEC Code. (Presentation)
New Return Reason Code for Entry Returned Per OFAC Instruction
This topic has a proposed effective date of March 19, 2027.
This proposal expands Article Three, Section 3.8 (RDFI's Right to Transmit Return Entries) to adopt a unique return time frame for OFAC-related returns:
Subsection 3.8.3.6 Timing Requirements for Entries Returned Per OFAC Instruction (New Subsection)
An RDFI that has been instructed by OFAC to return an Entry must Transmit such a Return Entry to its ACH Operator by the ACH Operator’s deposit deadline for the Return Entry to be made available to the ODFI no later than the opening of business on the second Banking Day following the RDFI’s receipt of OFAC’s instruction to return the Entry.
- Provides RDFIs with the time necessary to work with OFAC to determine appropriate action while placing a time limit on the return to facilitate timely notice to the ODFI or Gateway of the transaction.
- This return deadline aligns with an RDFI's obligation to return any credit entries declined by the Receiver using Return Reason Code R23 (Credit Entry Refused by Receiver)
"The RDFI must transmit any such return entry to its ACH Operator by its deposit deadline for the return to be made available to the ODFI no later than the opening of business on the second Banking Day following the RDFI's receipt of notification from the Receiver that it has declined the Entry."
This proposal would also update Appendix Four, Part 4.2 - Table of Return Reason Codes.
- Language in the return reason code table related to R16 would be updated to remove “Entry Returned Per OFAC Instruction” from the title, remove references in the description and remove Gateway from the initiating party.
- R16 would revert to its original title “Account Frozen” and be described as “Access to the account is restricted due to specific action taken by the RDFI or by legal action.”
- R90 (Entry Returned Per OFAC Instruction) would be added to the return reason code table.
- The same OFAC-specific language removed from R16 would be used for new Return Reason Code R90 (Entry Returned Per OFAC Instruction) and describe uses where OFAC has instructed the RDFI or Gateway to return the Entry.
- The return time frame described for this code’s use would be aligned with the new Subsection 3.8.3.6 to reflect the RDFI’s requirement to return the entry within two banking days from the receipt of OFAC’s instructions.
Impact
Definition of IAT Entries
Anticipated Benefits
For Originators, Third Party Service Providers/Third Party Senders (TPSPs/TPSs) and Originating Depository Financial Institutions (ODFIs):
- Improved understanding of what makes an ACH transaction an IAT.
- Easier compliance based upon this improved understanding.
- Improved customer due diligence, when appropriate.
- Improved customer service.
- For Receiving Depository Financial Institutions (RDFIs):
- Potential reduction in entries received that are mis-identified as IATs.
Potential Impacts
For Originators, TPSPs/TPSs and ODFIs:
- Potential alteration of IAT volume based upon new IAT understanding.
- If the new definition causes a shift from a domestic payment to IAT, new IAT Originator on-boarding activities could be required.
- Agreement updates
- Due diligence requirements
- Receiver information provision requirements
For RDFIs:
- Potential alteration of IAT volume based upon new IAT understanding, leading to a change in RDFI compliance screening volume.
Eligibility of IAT Entries for Same-Day Processing
Anticipated Benefits
For Originators, TPSPs/TPSs and ODFIs:
- Provides a same-day settlement option for the domestic component of international payments.
- Same-day option for inbound credit IAT credits to provide faster funds availability and for posting of inbound debit IATs, when appropriate, to meet the terms of the transaction.
RDFIs:
- Domestic RDFIs can provide faster access to funds for consumer and business accountholders.
- Better alignment with account-holder expectations for faster payment options.
Potential Impacts
For Originators, TPSPs/TPSs and ODFIs:
- Parties opting to originate same-day domestic settlement for Outbound IATs would need to remove any existing system and software edits that may prevent the origination of same-day IATs.
- Training, policies and procedures might need to be updated according to applicable product offerings/schedules.
- Origination, including either IAT or same-day settlement, is always optional.
For RDFIs:
- For domestic RDFIs, IAT screening capabilities must be able to meet processing and funds availability schedules.
For ACH Operators
- Remove current edits that restrict same-day settlement of IAT Entries
- Operators would settle same-day IATs identical to other SEC Codes
For domestic Gateway Operators
- Ability to process and account for IATs with same-day settlement
For all parties, including Receivers
- Potential lack of understanding that same-day processing of IATs would apply only to the domestic ACH Network component of an international payment
Date of Birth Field for IAT Entries
Anticipated Benefits
Originators, TPSPs/TPSs and ODFIs:
- Populating a party’s date of birth, when possible, within the IAT record should reduce the number of inquiries received from RDFIs requesting this information to resolve a potential compliance scanning match.
RDFIs:
- Receiving a party’s date of birth, when possible, within the IAT record should reduce the number of inquiries needing to be made to request this information to resolve a potential compliance scanning match. RDFIs have indicated this is the #1 data element requested to resolve exceptions.
Potential Impacts
For Originators, TPSPs/TPSs and ODFIs:
- Determination and implementation of policies and procedures related to date of birth collection, where appropriate.
- Assessment of data security measures for DoB information.
- System updates to generate revised IAT format.
For RDFIs:
- System updates to receive revised IAT format.
- Training/Procedure updates to locate information, when populated.
- Assessment of data security measures for DoB information.
For ACH Operators:
- System updates to process revised IAT format.
Non-Bank Financial Agencies in IAT Entries
Anticipated Benefits
Originators, TPSPs/TPSs and ODFIs:
- Ability to originate IATs to non-traditional accounts, if desired.
RDFIs:
- Potential receipt of IATs from new sources (or more accurate description of existing sources) on behalf of account holders.
Potential Impacts
Originators, TPSPs/TPSs and ODFIs:
- Review of current processes, if applicable, and potential programming updates to enable use of non-traditional accounts in IATs (if desired).
RDFIs:
- None anticipated.
Registration of IAT Contacts
Anticipated Impacts
All network participants involved in IAT processing would benefit from this proposal by a reduction in time in determining who and how to contact another financial institution regarding an exception with an IAT Entry.
- Non-FI participants, such as Originators and Receivers, would benefit by faster processing of their international payments.
Potential Impacts
Impacts of this proposal are anticipated to be limited to the addition of IAT handling contact information to the registry and maintenance with the existing contact information required of every Participating DFI.
- All Participating DFIs are currently required to have ACH operations and risk/fraud management contacts registered, updated within 45 days of a change and verified annually.
Valid Characters for ACH Records
Anticipated Impacts
- Defining valid characters for the ACH Network provides consistency for all participants and eliminates the potential for RDFIs to receive unexpected values.
- Clarity of valid characters may help reduce the number of rejected ACH files during origination processes.
- The proposed characters are aligned with current electronic payment industry standards.
- Support of extended characters may aid in the accuracy of legal identification of transaction participants.
Potential Impacts
- Ancillary or downstream systems, for all types of participants, may require adjustments to accurately handle extended characters not currently supported to maintain the integrity of the record.
New Return Reason Code for Entry Returned Per OFAC Instruction
Anticipated Impacts
- Removing ambiguity as to the reason for return would allow ODFIs, third-parties, and Originators to act definitively upon receipt of the return.
- R16 Return Entries would be understood as occurring due to legal or RDFI account action.
- R90 Return Entries would be understood as occurring per OFAC instructions.
- Improved legal compliance for ODFIs/Third-Party Senders/Originators.
- The time frame for a return per OFAC instructions would take into consideration the time needed for an RDFI to communicate with OFAC and still provide a timely return to the ODFI.
- R16 returns may be able to be remediated in the future if the account status should change.
Potential Impact
- ACH Operators would need to implement a new Return Reason Code, R90.
- Operators would be required to process this code.
- Systems for creating or deriving a return would require updates for this new code.
- Reporting updates would be required for this new code, including customer reports and ACH debit entry return monitoring reports.
- Updates to the description of R16 would be required in reporting and customer-facing systems.
- All Participating FIs would need to implement a new Return Reason Code, R90.
- RDFIs would need to be capable of originating a return with this code.
- ODFIs would need to be capable of receiving, interpreting and reporting this code to its originating customers.
- All FIs would also need to adjust descriptions for R16 (Account Frozen)
