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- Automated Clearing House Transactions—Overview. Objective. Assess the adequacy of the bank's systems to manage the risks associated with automated clearing house (ACH) and international ACH transactions (IAT) and management.
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Online Manual - BSA Info. Base. Automated Clearing House Transactions—Overview Objective. Assess the adequacy of the bank's systems to manage the risks associated with automated clearing house (ACH) and international ACH transactions (IAT) and management's ability to implement effective monitoring and reporting systems. The use of the ACH has grown markedly over the last several years due to the increased volume of electronic check conversion. In the electronic check conversion process, merchants that receive a check for payment do not collect the check through the check collection system, either electronically or in paper form.
Instead, merchants use the information on the check to initiate a type of electronic funds transfer known as an ACH debit to the check writer's account. The check is used to obtain the bank routing number, account number, check serial number, and dollar amount for the transaction, and the check itself is not sent through the check collection system in any form as a payment instrument.
Anti Money-Laundering Policy Statement and Program Procedures The Anti Money Laundering Program Procedures is developed, within the context of the Law, for the prevention and suppression of money laundering activities and.
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Merchants use electronic check conversion because it can be a more efficient way for them to obtain payment than collecting the check. ACH debits, reflecting the lower cost of ACH processing relative to check processing. Refer to the NACHA Web site. Check conversion transactions, as well as one- time ACH debits, are primarily low- dollar value, consumer transactions for the purchases of goods and services or the payment of consumer bills. ACH is primarily used for domestic payments, but the Federal Reserve Banks' Fed. Global system. 20. The Federal Reserve Banks operate Fed.
ACH, a central clearing facility for transmitting and receiving ACH payments, and Fed. Global, which sends cross- border ACH credits payments to more than 3. Canada only. can currently accommodate cross- border payments to several countries around the world. In September 2. 00. Office of the Comptroller of the Currency issued guidance titled Automated Clearinghouse Activities — Risk Management Guidance. The document provides guidance on managing the risks of ACH activity.
Banks may be exposed to a variety of risks when originating, receiving, or processing ACH transactions, or outsourcing these activities to a third party. Refer to OCC Bulletin 2. Automated Clearing House Activities: Risk Management Guidance" (September 1, 2.
ACH Payment Systems Traditionally, the ACH system has been used for the direct deposit of payroll and government benefit payments and for the direct payment of mortgages and loans. As noted earlier, the ACH has been expanding to include one- time debits and check conversion. ACH transactions are payment instructions to either credit or debit a deposit account. Examples of credit payment transactions include payroll direct deposit, Social Security, dividends, and interest payments. Examples of debit transactions include mortgage, loan, insurance premium, and a variety of other consumer payments initiated through merchants or businesses. In general, an ACH transaction is a batch- processed, value- dated, electronic funds transfer between an originating and a receiving bank. An ACH credit transaction is originated by the accountholder sending funds (payer), while an ACH debit transaction is originated by the accountholder receiving funds (payee).
Within the ACH system, these participants and users are known by the following terms: Originator. An organization or person that initiates an ACH transaction to an account either as a debit or credit. Originating Depository Financial Institution (ODFI). The Originator’s depository financial institution that forwards the ACH transaction into the national ACH network through an ACH Operator.
ACH Operator. An ACH Operator processes all ACH transactions that flow between different depository financial institutions. An ACH Operator serves as a central clearing facility that receives entries from the ODFIs and distributes the entries to the appropriate Receiving Depository Financial Institution.
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There are currently two ACH Operators: Fed. ACH and Electronic Payments Network (EPN). Receiving Depository Financial Institution (RDFI). The Receiver’s depository institution that receives the ACH transaction from the ACH Operators and credits or debits funds from their receivers’ accounts. Receiver. An organization or person that authorizes the Originator to initiate an ACH transaction, either as a debit or credit to an account.
Gateway. A financial institution, ACH Operator, or ODFI that acts as an entry or exit point to or from the United States. A formal declaration of status as a Gateway is not required.
ACH operators and ODFIs acting in the role of Gateways have specific warranties and obligations related to certain international entries. A financial institution acting as a Gateway generally may process inbound and outbound debit and credit transactions. ACH Operators acting as Gateways may process outbound debit and credit entries, but can limit inbound entries to credit entries only and reversals.
International ACH Payments. NACHA - The Electronic Payments Association (NACHA) issued International ACH Transaction (IAT) operating rules and formats that became effective on September 1. For additional information on the IAT, refer to the NACHA Web site. NACHA has since issued a number of modifications and refinements to their IAT operating rules. The IAT is a Standard Entry Class code for ACH payments that enables financial institutions to identify and monitor international ACH payments, and perform screening to ensure compliance with OFAC requirements. The rules require Gateways to classify payments that are transmitted to or received from a financial agency. 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.
United States as IATs. The classification will depend on where the financial agency that handles the payment transaction (movement of funds) is located and not the location of any other party to the transaction (e. Originator or Receiver). Under NACHA operating rules, all U. S. financial institutions that participate in the ACH Network must be able to utilize the IAT format.
Definition of IATAn IAT is an ACH 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 one or more of the following conditions are met: Holds an account that is credited or debited as part of a payment transaction; or. Receives funds directly from a person or makes payment directly to a person as part of a payment transaction; or. Serves as an intermediary in the settlement of any part of a payment transaction. IAT Defined Terms.
An "inbound entry" originates in another country and is transmitted to the United States. For example, an inbound entry could be a customer's on- line purchase from an overseas vendor. An inbound entry could also be funding for a company payroll.
Each subsequent IAT used for direct deposit would be an inbound IAT entry. An "outbound entry" originates in the United States and is transmitted to another country. For example, IAT pension payments going from a U. S. ODFI to a U. S.
RDFI in which the funds are then transferred to an account in another country would be outbound IAT entries. Payment Transaction Guidance. A payment transaction is: 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.
Identification of IAT Parties. The NACHA operating rules define parties as part of an IAT entry: Foreign Correspondent Bank: A participating depository financial institution (DFI) that holds deposits owned by other financial institutions and provides payment and other services to those financial institutions. Foreign Gateway: A Gateway that acts as an entry point to or exit point from a foreign country. Information Available Under the IAT Format. Data available to banks under the IAT format may assist banks in their OFAC, anti- money laundering, and monitoring efforts. For convenience, this information is sometimes referred to as "Travel Rule" information, but as a technical matter the funds transfer recordkeeping and travel rules at 3. CFR 1. 01. 0. 4. 10(f)) do not apply to ACH transactions and NACHA operating rules have not changed.
Originator and receiver information available to banks under the IAT format include: Originator name and address. Receiver name and address. Originator and Receiver account numbers. ODFI name (inbound IAT, foreign DFI), identification number, and branch country code. RDFI name (outbound IAT, foreign DFI), identification number, and branch country code. Country code. Currency code.
Foreign Exchange indicator. Effective March 1. Gateway must identify within an inbound IAT entry: The ultimate foreign beneficiary of the funds transfer when the proceeds from a debit inbound IAT entry are "for further credit to" an ultimate foreign beneficiary that is other than the Originator of the debit IAT entry, or. The foreign party funding a credit inbound IAT entry when that party is not the Originator of the credit IAT entry.
Refer to www. nacha. IATIndustry. Information. IAT format. Third- Party Service Providers A third- party service provider (TPSP) is an entity other than an Originator, ODFI, or RDFI that performs any functions on behalf of the Originator, the ODFI, or the RDFI with respect to the processing of ACH entries.
For example, a bank may hire a TPSP to conduct ACH activities on behalf of the bank. Third- party service provider is a generic term for any business that provides services to a bank.
City Express Money Transfer ||Anti Money- Laundering Policy Statement and Program Procedures. The Anti Money Laundering Program Procedures is developed, within the context of the Law, for the prevention and suppression of money laundering activities and terrorist financing. The procedure is developed to cover all procedures affected by the Law and to demonstrate the required due diligence on behalf of financial institutions such as banks, insurance companies and money transfer companies. In addition to the Manual, the corresponding policies and forms are developed to facilitate and documented implementation. Customer identification, acceptance and evaluation, Monitoring and control of transactions, Internal reporting, review and renewal of customer identification, working with third parties, Management of employees are examples of the areas addressed. Overview of the AML Policy. City Express Money Transfer Pvt.
Ltd is the money transfer company licensed by the central bank of Nepal and as an entity as one of the largest money transfer company has an important role to play in furthering the local and international efforts against money laundering and terrorist financing. The most effective way to fulfill this commitment and to protect both the company and its staff is to know your customer, be alert to suspicious activity and train all staff to be proficient at identifying suspicious activity on a regular basis. Overview of the AML procedures Manual. This manual contains the procedures that must be followed and controls that must be implemented by all AML staff and agents to ensure compliance with both local and relevant international AML legislation.
The company will review and update these procedures at least annually to take into consideration changes to the products, business conditions and regulatory environment. The annual review will also be used to evaluate how accurately the procedures reflect the product and how effectively they are in controlling the AML threat. All changes to this procedure manual must be approved by the management with significant changes also being approved by the management. AML Compliance Officer Designation and Duties.
As required under the AML Policy Act, the Company designates (name of AMLCO) as the Anti- Money Laundering Program Compliance Officer, with full responsibility for the Company's anti- money laundering (AML) program. The AML Compliance Officer will also ensure that proper AML records are kept. When warranted, the AML Compliance Officer will ensure Suspicious Activity Reports are filed with the Company's designated self- regulatory agency. Checking the office of Foreign Assets Control (OFAC) Lists. Before engaging in any money service activity (including but not limited to check cashing, money orders and wire transfers) which potentially may involve money laundering, and on an ongoing basis, we will check to ensure that a customer does not appear on the Treasury's OFAC “Specifically Designated Nationals and Blocked Persons” List, SDN List, and is not from, or engaging in transactions with people or entities from, embargoed countries and regions listed on the OFAC website. Because the OFAC Website is updated frequently, we will consult the list on a regular basis and subscribe to receive updates when they occur. We may, if necessary, access these lists through various software programs to ensure speed and accuracy.
We will also review existing accounts against these lists when they are updated and we will document our review. Customer Identification and Verification. We have established, documented, and maintained a written Customer Identification Program (or CIP). We will collect certain minimum customer identification information from each customer who engages in any money service activity with the Company; utilize risk- based measures to verify the identity of each customer who engages in any money service activity; record customer identification information and the verification methods and results; provide notice to customers that we will seek identification information. Monitoring Accounts for Suspicious Activity.
We will manually monitor a sufficient amount of money service activity to permit identification of patterns of unusual size, volume, pattern or type of transactions. The AML Compliance Officer will be responsible for this monitoring, will document when and how it is carried out, and will report suspicious activities to the appropriate authorities. We will create employee guidelines with examples of suspicious money laundering activity and lists of high- risk clients whose accounts may warrant further scrutiny. AML Record Keeping. Our AML Compliance Officer and his or her designee will be responsible to ensure that AML records are maintained properly.
As part of our AML program, the Company will create and maintain relevant documentation on customer identity and verification and funds transfers and transmittals as well as any records related to customers listed on the OFAC list. We will maintain and their accompanying documentation for at least five years.
Bank Company Relationship. We will work closely with our banking firm to detect money laundering.
We will exchange information, records, data and exception reports as necessary to comply with AML laws. Generally we have agreed that the Company will monitor customer activity including proper customer identification information as required. Training Programs. We developed ongoing employee training under the leadership of the AML Compliance Officer. Our training will occur on at least an annual basis. Based on our firm's size, its customer base, and its resources we have determined the training course to our staff.
The training course offered includes, at a minimum: how to identify signs of money laundering that arise during the course of the employees' duties; what to do once the risk is identified; what employees' roles are in the firm's compliance efforts and how to perform them; the Company's record retention policy; and the disciplinary consequences (including civil and criminal penalties) for non- compliance with the Act. The training program includes the maintenance of the records to show the persons trained, the dates of training, and the subject matter of their training.
Monitoring Employee Conducts and Accounts. We will subject employee money service transactions to the same AML procedures as customer accounts, under the supervision of the AML Compliance Officer. We will also review the AML performance of supervisors, as part of their annual performance review. The AML Compliance Officer's accounts will be reviewed by a qualified member of the Company staff. Confidential Reporting of AML Non- Compliance. Employees will report any violations of the firm's AML compliance program to the AML Compliance Officer, unless the violations implicate the Compliance Officer, in which case the employee shall report to an appropriate member of senior management.
Such reports will be confidential, and the employee will suffer no retaliation for making them.