IAT stands for International ACH Transaction, and is a new Standard Entry Class code to identify international ACH payments. An IAT is an ACH debit or credit entry that is part of a payment originating from or transmitted to an office of a financial agency (i.e. bank) located outside the territorial jurisdiction of the United States.
The new IAT rule will identify International ACH Transactions by focusing on where the financial agency that handles the payment is located. Specifically, when any ACH entry is part of a payment that involves a financial agency office that is not located within the territorial jurisdiction of the United States, the ACH entry must be identified using the new IAT SEC Code. Thus, certain payments currently formatted as domestic payments, but which are funded internationally, will need to be sent as IATs.