International ACH? I hope not!

Hey - we are working with a company to process their cross board payments. Specifically, the company is located in the UK, they will collect funds in the UK, consolidate them, and send 1 wire a day to their bank account at our bank in the US and then instruct us to disperse the funds via ACH domestically. Does this require us to send the funds in an International ACH (IAT) format along with the extra requirements of an IAT?

If not - awesome! but....

If so:

- if they have other funds in their account already in the US, can those funds be used instead and not require an IAT?

- can our bank give them a line of credit to use for the domestic disbursement? basically the funds that are being used that day are no the funds that are collected in the UK?

- if they wait a day and the funds settle for the day in the US and disburse the next day is that an IAT?

Basically im looking for a way so that this process is not going to require us to process the transactions as IATs.

Please help!

Thanks

First, ask yourself one question. Why is an international company approaching my one office $295MM bank and trying to get them to set up a system to avert the IAT requirements.

Second, then read this thread:

http://www.bankersonline.com/forum/ubbth...rue#Post1979091

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I've been in banking 45 years, and like anything else, when something seems to good to be true, it usually is.

A lot of times companies prey on greed so they entice a board and the bank goes out on a limb beyond their expertise. At first it may be good. When the customers know more than the bank, they are controlling the transactions and the bank will lose 100% of the time.

Well, I'm with Randy on this one, doesn't pass the smell test...however if you feel the need to proceed...

1. Who will be listed as the originating company on the transactions?
2. do they have a business license in your state?
3. will they maintain an account at your bank?
4. what line of business are they in?
5. how long has your bank had a relationship with this company? and why your bank?
6. do you really want to originate ACH items same day the wire is received?
7. who will create the ACH transactions?
8. my opinion, this would not be an IAT transaction, but before even getting to #8, numbers 1-7 need to be answered to my satisfaction, and I can't think of any answers that would do such.

You got some great advice here and I'd seriously look at what you're getting into.

But it you want specifics, look at the NACHA rules, specifically OG174. There are two examples that involve wires/swift.

"For example, 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 from a foreign financial institution to the US DFI."

Sounds to me like the first example above could apply and they would be considered IATs.

from the original post, it appeared a wire would be sent, then separate disbursal instructions would be sent a day later, not with the original wire...

either way, i'd be running away

There were two significant BSA/AML civil money penalty actions in recent months that involved a small institution taking on international transactions originating with companies that had no legitimate reason to do business with the institution. Both of the institutions had controls that were inadequate for the increased BSA/AML risk, and the driving force behind taking on the business was clearly fee income.

Go to the BOL BSA/AML Penalties page at http://www.bankersonline.com/security/bsapenaltylist.html. Scroll down to the links to the North Dade Community Development FCU and the Saddle River Valley Bank cases.