Account Disclosures. RDFI should review and update account disclosures to address:

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1 IAT for the RDFI

2 RDFI Obligations Account Disclosures OFAC Screening (Accounts) Acceptance and Screening of IAT Transactions Policies and Procedures (including OFAC) IAT Credit Processing Sample Procedures IAT Debit Processing Sample Procedures Processing Exception and Disputed Entries Account Statement Requirements Corporate Receiver Request for Information Charging Fees for Processing 2

3 Account Disclosures RDFI should review and update account disclosures to address: Potential delay in posting IAT transactions Freezing or Blocking accounts/transactions Consumer and Commercial customers are affected 3

4 RDFI Procedures OFAC Screening The FI is required to screen its customer database against the most current OFAC SDN list The frequency of the screening must be guided by the FI s internal policy and procedures 4

5 RDFI Procedures General OFAC Screening The FI must screen new accounts prior to opening FIs should compare all new accounts with OFAC s SDN list prior to account opening or shortly thereafter If FI performs OFAC screening after account opening, procedures need to be in place to prevent transactions (other than initial deposit) from occurring until the screening is completed If someone wants to open a new account and their name is on the SDN list Verify that this is the same person as on the SDN list If yes, the FI cannot open the account If no, proceed with account opening 5

6 Use of a Third Party The RDFI may utilize the services of a thirdparty to perform OFAC screens The RDFI is ultimately responsible for the compliance, no matter who does the screening RDFI cannot contract away this liability RDFI staff should understand what fields the third party is screening 6

7 What type of Account is Required for Blocked Funds? The RDFI must make sure blocked funds are placed into an interest bearing account Only OFAC authorized debits may be made out of this account OFAC must be notified within 10 business days about the blocked funds 7

8 If There is a SDN Match All accounts for the matched name should immediately be frozen so no funds can be withdrawn The appropriate FI officer should be notified immediately The name of the customer, transaction and account details will be needed to file the appropriate report with OFAC Report can be found on OFAC s website 8

9 Domestic ACH Transactions OFAC Screening The RDFI is required to reject or freeze transactions destined for a blocked account The ODFI & RDFI may rely on each other for OFAC compliance regarding their respective customer ODFI rely on RDFI for OFAC compliance regarding the Receiver RDFI rely on ODFI for OFAC compliance regarding the Originator 9

10 Acceptance and Screening of IAT Entries RDFI must accept all IAT entries All IAT Entries MUST be screened and cleared against the SDN list prior to posting Review even if the OFAC Screening Indicator reflects the Entry has already been screened Check all parties associated with the IAT Entry Includes memo posting Entries can be returned for appropriate reasons ( clean transactions or at the advice of OFAC) 10

11 What Fields are to be Screened on IAT Transactions? For inbound IATs the RDFI is responsible to review ALL parties to that transaction Receiver s Name Originator s name and physical address of Originator Originating Financial Institution Name, Identification, branch country code Receiving Financial Institution Name, Identification, branch country code Receiver s identification and physical address Remittance Information in the Payment Related Information contained in the optional Remittance Information addenda records The RDFI is responsible to review this information even if the OFAC Screening Indicator Fields are populated with a 0 11

12 Demonstrating Compliance The FI should develop a written ACH OFAC Compliance Policy that is clear and thorough Can be part of the FIs overall OFAC Policy Ensure staff is properly trained on the handling of Inbound entries, returning entries and NOCs 12

13 IAT Credit Processing Sample Procedures Review all incoming transactions for OFAC compliance Review even if the OFAC Screening Indicator reflects the Entry has already been screened Post clean transactions according to normal posting process Investigate suspect transactions Suspect transaction cleared by investigation Normal posting process Suspect transaction confirmed as an OFAC hit Post transaction Freeze account, if not already frozen Contact OFAC about next steps 13

14 IAT Debit Processing Sample Procedures Review all incoming IAT debits for OFAC compliance Review even if the OFAC Screening Indicator reflects the Entry has already been screened Post clean transactions according to normal posting process Investigate suspect transactions Suspect transaction cleared by investigation Normal posting process Suspect transaction confirmed as an OFAC hit Contact OFAC directly for further instructions If OFAC gives permission to return, use R16 (Account Frozen) Includes transactions intended for an account with a debit block/filter 14

15 Processing Exceptions Returning Entries Inbound IATs will be returned using the domestic return reason codes and return time frames as outlined in the ACH rules Outbound IATs will be returned to the U.S. ODFI using the timeframes of the receiving country (i.e., ODFIs may receive returns outside the normal return timeframe) 15

16 Returning Disputed IATs RDFIs can return a disputed Entry(s) if: The Entry(s) should be screened prior to returning If the screen comes back clean, proceed as usual If the screen comes back with hit, do not return, instead contact OFAC Return reason code R16 (Account Frozen/Entry Returned Per OFAC s Instructions) should be used if OFAC requests the FI to return the entry 16

17 Accounts with Debit Blocks If the FI receives an IAT debit for an account that has a debit block on it and the debit is not an OFAC hit Return the IAT debit R16 (Account Frozen) or R29 (Corporate Customer Advises Not Authorized) If the IAT debit is an OFAC hit Contact OFAC directly for further instructions 17

18 Processing NOCs Sending NOCs on IATs are allowed but many countries do not recognize them Seven mandatory Addenda Records ( Travel Rule ) are not required to be returned with the NOC IATCOR must be in Field 3 (IAT Indicator) of the Company Batch Header Record Refused NOCs are not supported 18

19 Stop Payments Stop payments may be placed on IAT entries Entry should be returned using the Return Reason code R08 (Payment Stopped) Entry must be returned within 2 banking days 19

20 Account Statement Requirements The RDFI must provide on the customer s statement, in addition to the required minimum information The secondary SEC, if available, which would be located in the first addenda record of the IAT transaction 20

21 Corporate Receiver Request for Information If the RDFI receives a request from its corporate customer for the remittance information, the RDFI is required to provide this information within 2 business days This information is found in the Remittance Addenda Record of the IAT transaction 21

22 Charging Fees for Processing The RDFI may charge fees for processing IATs due to the additional processing requirements associated with IATs NACHA ACH Operating Rules do not address fees charged by financial institutions 22

23 Contacting OFAC OFAC s Hotline Number