This presentation was prepared exclusively for the benefit and internal use of the J.P. Morgan client to whom it is directly addressed and delivered (including.

Understanding the International ACH Transaction (IAT)
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This presentation was prepared exclusively for the benefit and internal use of the J.P. Morgan client to whom it is directly addressed and delivered (including such client’s subsidiaries, the “Company”) in order to assist the Company in evaluating, on a preliminary basis, certain products or services that may be provided by J.P. Morgan. This presentation contains information which is confidential and proprietary to J.P. Morgan, which may only be used in order to evaluate the products and services described herein and may not be disclosed to any other person. In preparing this presentation, we have relied upon and assumed, without independent verification, the accuracy and completeness of all information available from public sources or which was provided to us by or on behalf of the Company or which was otherwise reviewed by us. This presentation is for discussion purposes only and is incomplete without reference to, and should be viewed solely in conjunction with, the oral briefing provided by J.P. Morgan. Neither this presentation nor any of its contents may be used for any other purpose without the prior written consent of J.P. Morgan. J.P. Morgan makes no representations as to the legal, regulatory, tax or accounting implications of the matters referred to in this presentation. Notwithstanding anything in this presentation to the contrary, the statements in this presentation are not intended to be legally binding. Any products, services, terms or other matters described in this presentation (other than in respect of confidentiality) are subject to the terms of separate legally binding documentation and/or are subject to change without notice. Neither J.P. Morgan nor any of its directors, officers, employees or agents shall incur any responsibility or liability whatsoever to the Company or any other party in respect of the contents of this presentation or any matters referred to in, or discussed as a result of, this document. J.P. Morgan is a marketing name for the treasury services businesses of JPMorgan Chase Bank, N.A. and its subsidiaries worldwide. J.P. Morgan is licensed under U.S. Pat Nos. 5,910,988 and 6,032,137. © JPMorgan Chase & Co. All rights reserved

What are International Payments?
Background What are International Payments? International payments are credit and debit payment instructions exchanged across national borders to transfer value between an Originator (sender) and a Receiver (beneficiary)

Payment Options/Communications in the U.S.
Urgent Non-Urgent Book Transfer Fedwire CHIPS SWIFT Message Check Cards ACH Money Transmitter PayPal Domestic Money Transmitter such as Western Union The options are now very similar- whether domestic or international Currently the options are still different for Urgent or Non-Urgent – although we know a system such as ACH would be very desirable with Same-day settlement. Book Transfer CHIPS SWIFT Message Fedwire Check Cards Money Transmitter ACH PayPal International

Regulatory Within U.S. Domestic ACH
Electronic Funds Transfer Act (Reg E) UCC4A NACHA Operating Rules OFAC Internationally No global rules body Rules: - Domestically - I took one payment system as an example - these are the different rules that impact ACH. All participants are familiar with the rules and are bound by those rules. OFAC is the one many of you might not have heard about - and we will discuss it more later. Internationally - every country has their own rules - as we do in the US - BUT there is no world governing body that can create operating rules or regulations that supersede the domestic rules. We do not have a “Federation” out there that all countries belong to.

Office of Foreign Assets Control (OFAC)
Administers and enforces economic and trade sanctions based on U.S. foreign policy and national security goals against Targeted foreign countries Terrorists International narcotics traffickers, and Those engaged in activities related to the proliferation of weapons of mass destruction Therefore requiring screening of electronic payments entering and exiting the U.S.

International ACH Functionality
No Global or International ACH Operator currently exists; therefore no single International ACH system is available Historically with U.S. ACH – 1993 NACHA Cross Border Council began work on the process and rules to facilitate batch payments between domestic ACH systems in different countries 1997 first Cross Border Payment Operating Rules Approved September 2000 new SEC codes - CBR/PBR September 18, 2009 – IAT (International ACH Transaction) replaced CBR & PBR Update to IAT: Sept. 8, 2011, 14 NACHA Operating Rules Amendments passed for IAT Entries – Effective dates range from 3/16/2012 to 3/15/2013

International Payment Risks & Challenges
U.S. OFAC and other government regulations vs. government regulations in other participating countries No internationally utilized standard for batch processing is available No common set of rules exists No international counterpart to the U.S. prenotification process available Settlement times vary by country Different formats exist for account numbers and bank routing numbers Holiday schedules vary by country Reversals are not allowed in many countries Debit rules vary by country Return Entry times and procedures vary from country to country Some clearing systems have local language requirements Local currency is required for domestic payment systems, plus fluctuation in local currency exchange rates Each country has their own regulations. With some it may take longer to settle the payment, and also may take longer to receive a Return.

What is the International ACH Transaction (IAT)?
Rule for US ACH payments implemented 9/18/09 Changed the definition of an international ACH transaction Replaced an existing cross border ACH payment type (CBR/PBR) Enabled compliance with US laws Benefitted Users Through: A reduction in funds movement costs More predictable cash flow Reduction in need to maintain multiple bank relationships globally Settlement on a specified value date

Gateway/Foreign Gateway
Two Gateways -one in the U.S. and one Foreign - are needed for an International ACH transaction (IAT) One Gateway is an exit point from the national payments system of the originating country Another Gateway is the entry point to the national payments system of the receiving country

International ACH Payment Overview
RDFI FX Settlement Translation Foreign Gateway Gateway Receivers (in the U.S.) National Payments Systems Originator (outside of U.S.) ODFI

OFAC Jurisdiction U.S. citizens and permanent resident aliens
Companies located in the U.S.* Overseas branches of U.S. companies* For the U.S. ACH Network, this means all participants in any of these categories are subject to Federal Sanctions policies * Includes Financial Institutions

Trends in U.S. Sanctions Groups or specific activities being added (e.g. “war on terror” -- terrorists and terrorist-financing arms, narcotics traffickers) Increased frequency of updates More multi-lateral in scope and coordination OFAC, FinCEN*, and other financial crime offices are now consolidated under the U.S. Treasury Department’s Office of Terrorism and Financial Intelligence * Financial Crimes Enforcement Network (

OFAC Penalties Both Criminal and Civil Vary by sanctions program
Can include: Imprisonment (employee) 10-30 years depending on the program Fines per count (corporate and individuals) $10,000 - $10,000,000 per count Forfeiture of property Please explain the vary by sanction’s programs as part of the comments. Provide example (Riggs) of non-compliance with OFAC policies

OFAC & Domestic ACH Understanding on domestic ACH arrived in 1997*
NACHA Rules required only lawful transactions be initiated, put onus on Originator Recognition at the time of low exposure on domestic transactions Recognition at the time of batch nature of ACH processing and lack of efficient interdiction software OFAC *OFAC letter Gen to Mr. Elliott McEntee of NACHA; 3/20/97

OFAC & International ACH
NACHA began working with OFAC in 2004 on the proposed rule change for International ACH transactions Speed and efficiency made ACH vulnerable to abuse with respect to international cross-border movement of funds Additional information was needed to permit an adequate degree of scrutiny of transactions for OFAC compliance One key element was to add the “Travel Rule” information to allow identification of all parties to the transaction

What is the “Travel Rule”?
31 CFR (g) of Bank Secrecy Act Banks and Originators must include certain information (Name and Address, Account number, Amount, Execution Date, ID of Receiving FI, similar information about Recipient) in covered payment transmittal orders Information must "travel" with transaction end-to-end ACH/EFTs covered by Regulation E Exempt [31CFR (jj)] for domestic transactions, but not exempt for international transactions Bullet #4 - Travel Rule is in place now, domestic ACH transactions are exempt but new IAT transactions will be required to contain the travel rule information

OFAC Request Letter from OFAC to NACHA dated November 9, 2004 that got this started: US RDFIs and Beneficiaries will continue to have an obligation to ensure that all aspects of inbound, cross-border transactions are in compliance with OFAC regulations and to take appropriate steps to investigate, suspend, reject, block and report on transactions as necessary (Inbound IATs) US ODFIs and their Originators will continue to be responsible for ensuring that all parties to the transaction, as well as the underlying purpose of the transaction, are not in violation of OFAC regulations, and they will need to take appropriate steps to investigate, suspend, reject, block and report on transactions (Outbound IATs)

Changes to International Payments
NACHA’s Primary Purposes for the IAT: Respond to OFAC’s request to align the ACH Rules with OFAC compliance obligations, and Make it easier for RDFIs to comply with those obligations

Inbound IAT Process Flow
Europe United States Originator US RDFI Country Border US RDFI IAT Format Required for ACH transactions sent through the US ACH Bank A sends a SWIFT or proprietary message to Bank B US RDFI This is an example, not specific to just European banks. All participant categories Bank A Bank B Foreign Gateway Gateway sends IAT transactions to ACH Operator for distribution To US RDFIs US Gateway can be a DFI or ACH Operator US - ACH Operator Foreign Gateway sends a SWIFT or proprietary message to US Gateway (DFI) the SWIFT message is translated to the IAT ACH format for distribution to the US RDFI

Outbound IAT Process Flow
United States Europe Originator Country Border Originator sends IAT to US Gateway Foreign Gateway may be a bank or ACH Operator in the receiving country IAT Format Required for ACH transactions sent through the US ACH European Banks Foreign Gateway US Gateway US Gateway can be a DFI or ACH Operator Foreign Gateway sends payments to RDFI through domestic payments system in the receiving country

Definition of International ACH Transaction
International ACH Transaction – a debit or credit Entry that is part of a payment transaction involving a financial agency’s office that is not located in the territorial jurisdiction of the United States An office of a financial agency is involved in the payment transaction if it: holds an account that is credited or debited as part of the payment transaction, or receives payment directly from a Person or makes payment directly to a Person as part of the payment transaction, or serves as an intermediary* in the settlement of any part of the payment transaction 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 Origination, receipt *In the role of a Correspondent Bank

Payment Transaction Guidance
Payment Transaction definition as per OFAC Within the IAT definition, payment transaction refers to: An instruction of a sender to a bank to pay, or to obtain payment of, or to cause another bank to pay or to obtain payment of, a fixed or determinate amount of money that is to be paid to, or obtained from, a Receiver, and Any and all settlements, accounting entries, or disbursements that are necessary or appropriate to carry out the instruction

IAT Definition - continued
The IAT definition classifies international payments based on the geographical location of the financial agencies (financial institutions or money transmitting businesses) involved in the transaction, instead of on the location of the other parties to the transaction (e.g., Originator or Receiver) Payment transactions that start as wires or interbank transfers from abroad and are converted to ACH Entries by a U.S. financial agency would be covered under this definition On the other hand, ACH Entries originated from an account at a U.S. DFI based on instructions from the account holder residing abroad would not be covered, unless the instructions were included with funding in a SWIFT or proprietary message sent from a foreign financial institution to the U.S. DFI Similarly, domestic ACH Entries funded over the counter at a U.S. DFI would be excluded, while a similar entry funded at a foreign bank would be included (See OG for more examples)

+ + = IAT IAT Formula = U.S. Payment Financial ACH Transaction Agency
(Instruction + Settlement) U.S. ACH Network + Financial Agency (Outside the Territorial Jurisdiction of the United States) + = IAT Use of the IAT SEC code is required IF the transactions flow through the U.S. ACH Network at some point!

Reason for Payment OFAC requested that the reason for payment be included in IAT payment transactions Reason for Payment is a 3 digit code, included in the Transaction Type Code Field, with pre-defined codes (examples) ANN – annuity BUS – Business/Commercial DEP – Deposit PEN – Pension RLS – Rent/Lease SAL – Salary/Payroll TAX - Tax All Transaction Type Code Values are listed in Appendix Three of the 2012 NACHA Operating Rules

Transaction Type Codes
Expanded the use of the Transaction Type Code Field for Inbound IAT transactions to carry a “Secondary SEC Code” for WEB, TEL, ARC, POP, BOC, and RCK If ARC, BOC or RCK Codes are listed, a NACHA banking convention has been developed to carry the Check Serial Number* And for POP Entries, the Check Serial Number and Terminal City and Terminal State go in the Payment Related Information of the Remittance Addenda Record* * This information is found in the IAT Addenda Record for Remittance Information – see Appendix Three in 2012 NACHA Operating Rules

Addition to Article One - General
Exemption From Rules Obligations A Participating DFI would not be required to debit or credit an account or to transfer funds if the Participating DFI reasonably believes that taking such action in connection with a specific Entry would violate applicable U.S. Legal Requirements* Example: excuses an RDFI from its obligation to recredit a Receiver for an unauthorized debit Entry under the Rules when such action is prohibited by OFAC Example: if RDFI is in the process of an investigation of the parties named in an IAT Entry against the OFAC SDN list and needs more time to determine whether there is a hit or not, the RDFI may delay the transfer of funds to or from the account until the investigation has concluded Origination, receipt *See Subsection on page OR 1

IAT Transaction - Formats
7 Mandatory Lines of Addenda Batch Header FX Codes Company Information Country Information, GO/ODFI IAT Entry Detail GO/RDFI Addenda # RDFI Acct # Amount OFAC Screening Indicator 1 Addenda Tran Type Code FX Amount Foreign Trace Receiver 2 Addenda Originator Name and Address 3 Addenda Originator City State and Country Code 4 Addenda ODFI Name and Identification and Country Code 5 Addenda RDFI Name and Identification and Country Code 6 Addenda Receiver Identification and Address 7 Addenda Receiver City State and Country Code (8 Addenda Optional) Remittance Information (9 Addenda Optional) Correspondent Information The Payments Authority 28

Corporate Originator Responsibilities
A look from the corporate Originator viewpoint for originating IATs: Domestic Originators should be aware that they are subject to applicable U.S. law, including OFAC-enforced sanctions when initiating ACH Entries Agreements between ODFIs and Originators should include a statement that the Originator acknowledges that it may not initiate ACH Entries that violate the laws of the United States Need to develop or review your existing OFAC compliance policy Need familiarization with all rules related to IAT Need to review existing vendor, employee and pension payments for possible IAT applications (Corporate Due Diligence) *

Corporate Originator Responsibilities
Ensure that additional mandatory information is available in company database to populate fields if IAT is required (may need to gather additional information from customers and other parties) Provide JP Morgan Chase with your IAT contacts; detailed implementation information will be provided Contact your payroll service provider and vendors Contact your Treasury Management Officer or Customer Service Professional at JP Morgan Chase if you have any questions

IAT Comments and Updates
For 3rd Quarter, 2011, there were 9.53 million IAT transactions 9.21 million Commercial, .32 million Government Total Dollar value: $ billion Ave Amt. Commercial: $1,858, Ave. Amt. Government: $528 Return Rates: IAT Credits- 0.65%, mostly R03, R04 Return Rates: IAT Debits- 1.81%, mostly R01, R09, R03, R04, R10 For 4th Quarter, 2011, there were million IAT Transactions 10.08 million Commercial, .33 million Government Ave. Amt. Commercial: $1,846, Ave. Amt. Government: $543 Return Rates: IAT Credits – 0.61%, mostly R03, R04 Return Rates: IAT Debits %, mostly R01, R09, R03, R04, R10 This year so far – more PPD, WEB & TELs converted over to IAT There has been modest volume on false IAT hits, several IAT debits have been rejected; few IAT credits have been blocked Continued Education is needed to properly format IAT transactions 3rd Qtr Cross-Border Use of Direct Deposit and Direct Payment via ACH Expands At 9,532,664 transactions in Q3 2011, IAT volume continues to increase quarter-over-quarter, up 32.9 percent from the previous quarter. In Q3 2010, IAT volume was at 1,538,251 transactions - Change increase is over 6 times as much as one year ago!

Understanding IAT ACH Rules Amendment: IAT Entries and the Effect of Illegality – March 16, 2012 This amendment clarified that a Participating DFI must process each IAT Entry in accordance with all requirements of the NACHA Operating Rules However, a DFI is excused from its obligation to comply with specific requirements under the Rules only when the processing of an IAT Entry would cause the DFI to be in violation of U.S. law The DFI must comply with its obligations under the Rules unless it identifies an IAT as a suspect transaction For domestic RDFIs that receive inbound IATs, these obligations include the timely provision of funds and the timely transmission of Returns

Understanding IAT ACH Rules Amendment: Clarification of Rules Exceptions for IAT Entries – March 16, 2012 This amendment revised the list of provisions in the Rules (Article Two) that do not apply to Outbound IAT Entries: Authorization and Notice with Respect to Consumer Accounts Agreement to be Bound by the Rules Reclamation Entries and Written Demands for Payment Dishonor of Return by ODFI It clarified that certain functional processes apply to Outbound IAT Entries only to the extent that they are supported by the laws and payment system rules of the foreign receiving country: Prenotifications Reversing Files and Reversing Entries Notifications of Change Reinitiation of Returned Entries

Understanding IAT ACH Rules Amendment: Clarification of Rules Exceptions for IAT Entries – March 16, 2012 (continued) It clarified that certain functional processes apply to Outbound IAT Entries only to the extent that the Uniform Commercial Code Article 4A (UCC4A) applies: Notice by ODFI to Originator for Non-consumer Credit Entries It clarified that certain functional processes apply to Outbound IAT Entries only to the extent that the laws and payment system rules of the foreign origination country applies: ODFI and Originator action on Notification of Change (NOC) These sections (Article Three) do not apply to Outbound IAT Entries: RDFI May request Copy of Receiver’s Authorization of Entry from ODFI Prenotifications Provisions for Reclamation Entries and Written Demands for Payments Also – (Article Five) Gateway Action on Receipt of NOC Related to Inbound IAT Entries now states: Gateway must provide corrected data within two banking days of Settlement Date of NOC

Understanding IAT ACH Rules Amendment: Minimum Description Standards for IAT Entries Clarified – September 21, 2012 Article RDFI Must Provide Entry Information for Consumer Accounts Where it previously said “Company Name” it now says “Company/Originator Name” For an ARC, BOC, POP, RCK or XCK Entry, or an IAT Entry where the Transaction Type Code field contains a value of ‘ARC’, ‘BOC’, ‘POP’ or ‘RCK’, the Check Serial Number (if POP: must also include the Terminal city and Terminal state as defined in Regulation E) Article – RDFI Must Provide Entry Information to Receivers of ARC, BOC, or POP Entries to Non-Consumer Accounts RDFI must provide or make available to a Receiver the contents of the Check Serial Number field of an ARC, BOC, or POP Entry, or an IAT Entry where the Transaction Type Code field contains a value of ‘ARC’, ‘BOC’ or ‘POP’ to a non-Consumer Account Software Change!

Understanding IAT ACH Rules Amendment: Required Gateway Agreements and Authorizations for Outbound IAT Entries – March 16, 2012 Article Five Required the Gateway to have an agreement in place with either the ODFI or its own customer (i.e., its own account holder or another party) before transmitting Outbound IAT Entries internationally Also required the Gateway to obtain authorization from either the ODFI or its own customer (whichever has the agreement with the Gateway) to: Transmit outbound IAT Entries Arrange for settlement of such Entries with the Foreign Gateway Arrange for further transmission of such Entries to the foreign receiving financial institution and settlement of such payments to the foreign Receiver’s account And, expanded the scope of Return Reason Code R81 (Non-Participant in IAT Program) to facilitate the return of an IAT Entry where these required agreements/authorizations are not in place (Article Four)

Understanding IAT ACH Rules Amendment: Gateway Notification of Rejected Inbound International Payment – September 21, 2012 Established a requirement that a Gateway notify the intended RDFI when an inbound international payment has been blocked and/or rejected because the origination of an IAT Entry for such a transaction would violate U.S. law The Gateway must provide the intended RDFI with the following minimum information from the payment transaction within five Banking Days of blocking or rejecting the payment transaction: Names and complete addresses of all parties to the payment transaction Amount of the payment transaction Date of the payment transaction

Understanding IAT ACH Rules Amendment: Return of Outbound IAT Entry by Foreign Gateway – Transmission of ACH Return by Gateway to ODFI – March 16, 2012 Established a new subsection (5.1.5 Gateway Must Transmit Return Entries for Valid Returns) within Article Five: A Gateway must Transmit a Return Entry for any Outbound IAT Entry that is returned to it by the Foreign Gateway in accordance with the foreign law or foreign payment system rules by which the Gateway is bound The Gateway must Transmit the Return Entry in such a time and manner as to be made available to the ODFI no later than the opening of business on the second Banking Day after the Gateway’s receipt of the valid Return from the Foreign Gateway

Understanding IAT ACH Rules Amendment: Identification of the Foreign Funding Financial Institution within an IAT Entry – March 16, 2012 The descriptions of the following fields within the Fourth IAT Addenda Record (with Originating DFI Identification) were clarified that this information, when contained in an Inbound IAT Entry, must identify the foreign financial institution that provided the funding for the transaction Originating DFI Branch Country Code Originating DFI Identification Originating DFI Identification Number Qualifier Originating DFI Name These changes eliminated the use of domestic payment system terminology to clearly distinguish between the financial institution in the foreign country and the U.S. Gateway, and ensured that these fields all corresponded to the foreign financial institution funding the payment transaction

Understanding IAT ACH Rules Amendment: Clarification of Originator Identification Field – In IAT Batch Header Record - March 16, 2012 Originators Not Established Under the Laws of a State or the U.S. In cases where this number exceeds 9 characters, the last 9 characters of the account number will be used; if number has 9 or fewer characters, then all will be used Use of Leading Characters as Part of the Originator Identification Number The Rule added language to the definition of the Originator Identification field to permit various codes to be used in the first position Identification of Third-Party Senders in IAT Entries (Since Third-Party Senders were not identified in the original IAT format) - When the ODFI has a contractual relationship with a Third-Party Sender rather than the Originator itself, the value of this field may identify either the Originator or the Third-Party Sender

Understanding IAT ACH Rules Amendment: New Transaction Type Code to Identify Remittances – September 21, 2012 This amendment expanded the list of code values for used within the Transaction Type Code field in the First IAT Addenda Record to identify international payments originated by a natural person through a remittance product or service New Code is “REM” Software change!

Understanding IAT ACH Rules Amendment: Use of Return Code R16 to Identify OFAC-Related Returns – March 15, 2013 (Appendix Four) The description of R16 (Account Frozen) was revised to accommodate the return of Entries in response to an instruction from OFAC to do so Since implementing IAT, NACHA has received many inquiries regarding which Return Reason Code is appropriate for an RDFI to used to indicate that the return of an IAT Entry was based on an instruction to do so from OFAC – and R16 has been determined to provide the closest match

Understanding IAT ACH Rules Amendment: Return Reason Codes R80-R84 Clarification of Use for Outbound IAT Entries Only – March 16, 2012 The descriptions of the Return Reason Codes R80-R84 (which are used solely by a Gateway) were revised to clarify that these code are applicable only to Outbound IAT Entries (Appendix Four)

Understanding IAT ACH Rules Amendment: Return Reason Code and Change Code for Gateway Use with Incorrectly-Coded International Payments – March 15, 2013 Two new codes were established: one Return Reason Code and one Change Code for use by Gateways to advise ODFIs and Originators that funds related to a domestically–coded Entry (such as PPD, CCD, etc.) are being moved out of the country and that the Entry should have been formatted as an IAT Entry New Return Reason Code: R85 – Incorrectly Coded Outbound IAT New Notification of Change Code: C14 – Incorrect SEC Code for Outbound IAT Prior to this implementation date, a Gateway could return such an Entry using Return Reason Code R17 (File Record Edit Criteria) if it was unwilling to assume the risks of processing the payment internationally without complete information but use of R17 did not provide a clear and distinct message to the ODFI Software Change!

Understanding IAT ACH Rules Amendment: Corrected Data for IAT Entries – NOC Code Descriptions – March 15, 2013 Description of Notification of Change Codes C04 (Incorrect Individual Name/Receiving Company Name) and C09 (Incorrect Individual Identification Number) were corrected as they relate to IAT Entries - under the “notes” section for these codes For C04 Notes: IAT: For IAT Entries, the Correct Individual Name/Receiving Company Name appears in the first 35 positions of the Corrected Data field For C09 Name: Name is now Incorrect Individual Identification Number/Incorrect Receiver Identification Number, and on C09 Notes: IAT: For IAT Entries, the correct Receiver Identification Number appears in the first 15 positions of the Corrected Data Field

Understanding IAT ACH Rules Amendment: Expansion of Return Reason Code R84 (Entry Not Processed by Gateway Operator) – March 16, 2012 The Return Reason Code R84 (Entry Not Processed by Gateway) was broadened to accommodate a Gateway’s return of an Outbound IAT Entry when it is unable to process the transaction because the payment system in the foreign receiving country does not support a particular rule or function defined as part of the domestic ACH Network An example is that although the U.S. ACH Network supports a process to allow reversals of Erroneous Entries, many foreign payments systems do not

Corporate Originator IAT Resources from NACHA*
IAT Corporate Tool Kit IAT for Corporate Practitioners, Executive Summary Sample IAT Corporate Communication to Employees and Vendors Guidance for IAT Corporate Due Diligence IAT Payment Scenarios Simplified IAT FAQs for Corporate Practitioners IAT Equation Is My Transaction an IAT? IAT Readiness Checklist for Corporate Practitioners IAT Corporate Newsletter Article IAT Specific Data Elements IAT PowerPoint – IAT Overview for Corporate Practitioners Also NACHA’s IAT Survival Guide (3rd Edition, Chapter Eleven: IAT Corporate Tool Kit) *

IAT Corporate Due Diligence (as stated on NACHA’s IAT Resource Page)
Determination of an appropriate type and degree of due diligence in properly identifying international payments is not defined by either NACHA or OFAC OFAC mandates that a company properly identify and handle a payment involving the movement of funds internationally NACHA mandates proper use of Standard Entry Class Code and application of the rules based on the nature of the funds transfer and parties involved in the payment As a result, the parties bound to such standards must establish business practices that enable them to gather necessary information to comply with those standards The Corporate Originator is bound to comply with NACHA rules through their agreement with ODFI, and, in most cases the corporate Originator knows the parties with which it does business, where those funds are destined, where its employees reside, etc. As a result, Originators should generally hold the responsibility for asking appropriate question of their vendors and employees sufficient to determine whether those funds will remain domestic or whether the funds will move internationally

IAT Corporate Due Diligence (as stated on NACHA’s IAT Resource Page)
The ODFI and its customer should work closely together to identify what level of risk each is willing to take on regarding their compliance with NACHA and OFAC requirements and what level of research is necessary to meet that risk tolerance for potential violations of these rules and regulations These issues should be specifically defined within the ODFI-Originator contract NACHA has developed some sample language for communications between Originators and their employees and vendors, which can be found on NACHA’s IAT Resource Page at NACHA does not suggest that companies survey & receive responses from every employee or vendor – rather that each company should determine whether they have transactions being sent out of the country, develop a specific company policy to determine how this should be addressed, and implement that policy Whether the company identifies specific parties to contact or whether a general notice is provided to all is something that needs to be determined by each company on an individual basis

OFAC References OFAC Homepage:
OFAC SDN List: Recent SDN Changes: Downloadable SDN List: OFAC FAQs:

Questions/Comments

JPMorgan Chase Contact
Beth Anne Hastings JPMorgan Treasury Services, ACH Product Mgr. Phone Add additional contact information Beth Anne Hastings Treasury Services ACH Product Manager Phone

Understanding IAT Additional Resources www.nacha.org

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This presentation was prepared exclusively for the benefit and internal use of the J.P. Morgan client to whom it is directly addressed and delivered (including.

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