Recognizing Risk in ACH Transactions

Recognizing Risk in ACH Transactions


NACHA – The Electronic Payments Association has worked closely with the Office of Foreign Assets Control (OFAC) for many years to ensure that Automated Clearing House (ACH) transactions are screened for OFAC compliance. NACHA agreed to develop a new standard for international ACH transactions (IATs). The objectives of this initiative were to ensure that IATs were being screened properly for OFAC compliance and to make it easier for receiving depository financial institutions (RDFIs) to comply with OFAC regulations. As of September 19, 2009, all financial institutions that conduct IATs must code such transactions in a manner easily identifiable for OFAC screening purposes.

In order to ensure compliance with the new NACHA IAT requirements by September 2009, organizations must prepare for the transition by:

  • Assessing existing transaction monitoring systems to determine whether they have the capacity to code IATs per the NACHA requirement
  • Enhancing OFAC policy and procedures to include compliance steps for the IAT coding and screening process
  • Conducting training for applicable personnel on OFAC and the NACHA IAT requirements
  • Performing an independent test of the enhanced IAT compliance program and transaction monitoring system to ensure proper effectiveness


Major increases in the value of available civil penalties as well as the rapid escalation of the actual civil penalties imposed on companies for violations of economic regulations administered by OFAC have highlighted the need to implement this new requirement effectively.

Challenges and Opportunities

Some of the issues and challenges anticipated by financial institutions through this transition include:

  • Increased scrutiny from regulatory agencies
  • Understanding and implementing this new requirement, which may be especially problematic for smaller institutions
  • Increased cost of compliance at a time when most institutions are looking for areas to cut back
  • Continued struggles for the many financial institutions that deal in bundled ACH transactions to screen these transactions effectively for OFAC compliance

Our Point of View

We believe that the keys to an effective and efficient IAT transition are:

  • Select or enhance a transaction monitoring system that can best code IATs.
  • After implementation of the coding into the transaction monitoring system, conduct testing to ensure that all IATs are properly screened for OFAC compliance.
  • Ensure that all applicable personnel are trained appropriately on this new requirement.


How We Help Companies Succeed

Our Regulatory Consulting practice helps organizations solve these challenges using proven, creative and cost-effective solutions. Our professionals are former regulators and industry executives with practical, first-hand experience in designing, managing and evaluating the effectiveness of world-class compliance programs. In addition, our experts assist clients with responding to regulatory inquiries, addressing regulatory enforcement actions, conducting regulatory reviews and audits, and conducting regulatory training.


A major global payment processor installed upgraded OFAC screening technology. Protiviti was engaged during the beta testing of the system to assist the company in determining whether the technology had been installed and was being deployed appropriately.

Our review disclosed the fact that the initial installation had failed to capture all of the system feeds that were necessary to ensure that the company was screening all identified at-risk transactions. The company was able to correct this problem before the system went live and averted exposing the company to significant risk.


Carol Beaumier
[email protected]
John Atkinson
[email protected]

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