ELECTRONIC FUNDS TRANSFER (EFT): A payment made through Fed Wire or the ACH is referred to as an EFT.

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1 FINANCE AND TREASURY POLICIES AND PROCEDURES E056 INCOMING ELECTRONIC FUND TRANSFERS PURPOSE To establish procedures to enable identification of incoming electronic fund transfers and expedite the related entries into the University's accounting system. There are two types of electronic payment mechanisms; Fed Wire or Automated ClearingHouse (ACH). DEFINITIONS FED WIRE: A real-time method of moving immediate credit (Fed Funds), and supporting documentation, from bank to bank via the Federal Reserve system through its member's bank accounts. Fed Wires are usually received on the day of execution, unless initiated from a foreign bank outside the Federal Reserve System. NOTE: Wires are costlier to process than ACHs, and are usually used by consumers, such as students and patients, or companies wishing to process a single and/or expeditious payment. AUTOMATED CLEARING HOUSE (ACH): A network of financial institutions, in addition to the 12 district Federal Reserves, originally designed as a private electronic alternative to the paper-based check clearing system. ACH transactions are sometimes referred to as Direct Deposits. ACH is a non-proprietary system where multiple payments are batched, warehoused, then executed on the effective date of the batch. The effective date of the batch can be one to many days in the future, but not same day. ACH payments are less expensive to process than wire transfers, and are usually used by government agencies or companies that have access to that system, and who wish to reduce the cost of electronic transfers, and reduce the amount of checks issued. Typically consumers will not have access to the ACH system unless special arrangements are set-up with bill paying software. ELECTRONIC FUNDS TRANSFER (EFT): A payment made through Fed Wire or the ACH is referred to as an EFT. INTERNATIONAL BANK ACCOUNT NUMBER (IBAN): An IBAN or International Bank Account Number is a series of alphanumeric characters that uniquely identifies a customer's account held at a bank anywhere in the world. Crossborder transactions introduce a further level of complexity above that of domestic clearing as there are many variations in the way countries undertake payment processing. The IBAN has been introduced to help reduce problems with crossborder transactions by providing a standard format for displaying and validating international bank account numbers. An International Bank Account Number Page 1 of 5

2 typically contains a two-character ISO country code, two check digits for validation purposes followed by the domestic bank code and account number. The format of the IBAN helps to ensure that cross border payments are processed correctly. SOCIETY FOR WORLDWIDE FINANCIAL TELECOMMUNICATIONS (SWIFT): Wires outside the U.S. must first be transferred through other foreign banks to the U.S. correspondent via SWIFT. SWIFT is an international message switching service where funds are transferred by requesting debits and credits to be executed between the bank accounts of foreign correspondents. Final settlement in the U.S. always occurs through Fed Wire. The SWIFT address of the University's bank is required, in addition to the Fed Wiring instructions, when funds are wired from foreign banks. Depending on the sophistication and responsiveness of the country's banking system, in addition to the number of corresponding banks the information travels through, the funds could arrive from one (1) to five (5) working days after the wire is initiated by the foreign bank. ORIGINATING BENEFICIARY INFORMATION (OBI): The OBI is the informational portion of a wire transfer. It is a necessary and important element, providing the receiving bank's customer information as to why the wire was sent, by whom, and how to apply it. INTERNATIONAL ACH TRANSACTIONS: An ACH rule amendment approved in August, 2007, introduced a new transaction type to align U.S. ACH Rules with OFAC compliance obligations. This ruling became effective September 18, The rule requires all payments funded internationally or sent to another country via the U.S. ACH network to be identified as international ACH transactions using a new Standard Entry Class Code called 'IAT' or an 'International ACH Transaction'. An IAT is part of a payment transaction involving a financial agency's office that is not located in the territorial jurisdiction of the U.S. The originating institution is responsible for processing an ACH transaction as an IAT even if funds are initially deposited to a bank in the U.S. and the beneficiary eventually moves the funds offshore. This transaction would qualify as an IAT. The University will perform due diligence to determine if an ACH payment will be moved out of the U.S. by the beneficiary, and utilize the IAT format accordingly. Each originating department is responsible for coordinating this process. ADDENDA RECORD: There are multiple formats for an ACH file, but all allow a field for multiple lines of text called an Addenda Record. While this field is not mandatory, it is a necessary and important element of the ACH, providing the receiving bank's customer information as to why the ACH was sent, by whom, and how to apply it. AMERICAN BANKERS ASSOCIATION (ABA) NUMBER: The ABA number is the nine (9) digit electronic address of a financial institution. The ABA number is sometimes referred to as the Transit Routing Number. The ABA number is encoded in the MICR (Magnetic Ink Character Recognition) line of all checks. NOTE: The ABA is not necessarily identical for checks, wires, and ACHs. Page 2 of 5

3 POLICY All incoming EFTs will be identified and recorded in the University's accounting system in a timely manner. PROCEDURE 1) IDENTIFY TYPE OF EFT: Determine if the sender is directing their financial institution to execute a Fed Wire or ACH. Rules of Thumb a) Students and patients should always be given Fed Wiring instructions, unless they specifically request ACH instructions. b) Government agencies almost always pay through the ACH. c) Large corporate payments are typically made through Fed Wire. d) Foreign entities always pay through wire transfer via SWIFT & Fed Wire. e) When in doubt, ask. 2) GET THE MOST CURRENT WIRE OR ACH INSTRUCTIONS: The most current instructions will be posted in this policy. You may also contact the Treasurer's Office and confirm the latest instructions with either the Cash Manager or the Executive Director of Treasury Operations at ) PREPARE THE INSTRUCTIONS FOR DISTRIBUTION: On department letterhead, prepare the Fed Wire or ACH instructions from the applicable sample template, found in the TEMPLATE exhibits A and B below. Pay careful attention to the instructions when composing the language in the OBI or ADDENDA RECORD, as this will help us identify your department as the receiver of the funds. Give these instructions to the party making the transfer payment. 4) NOTIFY CASH OPERATIONS OF LARGE DOLLAR AMOUNTS Cash Operations must be notified of any expected incoming funds transfers of $1 million or more, and the date expected, if known. Call the Cash Manager or Executive Director of Treasury Operations at ) DEPARTMENT PREPARES JOURNAL ENTRY WHEN EFT IS RECEIVED: Cash Management identifies all incoming EFTs through an online bank system the day after they're received. From the descriptive text in the OBI or ADDENDA RECORD Cash Management routes a copy of the incoming EFT to respective departments via . This serves as backup for the journal entry. If the department is uncertain of the correct accounting entries or how to prepare a journal entry, please contact the Director of Financial Reporting, at , in the Controller's office. RESOLVING PROBLEMS: If an EFT is received without enough descriptive text to identify the proper routing to the department, Cash Management requests more information from the sender via the University's bank. If the EFT was processed through many correspondent banks, the process could take weeks or longer if the wire originates from a foreign source. In the interim, the EFT is held in suspense until further information is obtained. If a department is expecting an EFT, and has not been notified of receipt in a reasonable amount of time from the anticipated date, the department should call Cash Management, at , to check the online bank reporting systems. Page 3 of 5

4 TEMPLATES: Include all information listed in caps, and complete OBI or Addenda Record as noted in Exhibits A or B below. EXHIBIT A - EFT TEMPLATE FOR FED WIRE Print on Departmental Letterhead MONIES SHOULD BE WIRED IN FED FUNDS TO: BANK OF AMERICA, N.A. ABA SOUTH DIXIE HIGHWAY CORAL GABLES, FL CREDIT: UNIVERSITY OF MIAMI CONCENTRATION ACCOUNT ACCOUNT NUMBER For Student Account payments, use the following credit and account: CREDIT: UNIVERSITY OF MIAMI STUDENT ACCOUNT ACCOUNT NUMBER: If funds are sent to the University from an international bank outside of the U.S., the following SWIFT code must be noted: BOFAUS3N IN THE OBI OF THE WIRE, PLEASE PROVIDE THE FOLLOWING TEXT: OBI Options: Use all that apply in the following order: 1) If a student, list Student Name and I.D. 2) If a patient, list Doctors Name and Patient Name. 3) List receiving Department Name (Mandatory Field) 4) ATTENTION: List the Person to notify when transfer is identified (Mandatory) 5) If funds are for a specific project, list Project Name 6) Use any other identifier that would be useful Page 4 of 5

5 EXHIBIT B - EFT TEMPLATE FOR THE ACH Print on Departmental Letterhead MONIES SHOULD BE TRANSMITTED IN NACHA FORMAT TO: BANK OF AMERICA ABA CREDIT: UNIVERSITY OF MIAMI CONCENTRATION ACCOUNT ACCOUNT NUMBER For Student Account payments, use the following credit and account: CREDIT: UNIVERSITY OF MIAMI STUDENT ACCOUNT ACCOUNT NUMBER: IN THE ADDENDA RECORD OF THE ACH, PLEASE PROVIDE THE FOLLOWING TEXT: Addenda Record Options: Use all that apply in the following order: 1) If a student, list Student Name and I.D. 2) If a patient, list Doctors Name and Patient Name. 3) List receiving Department Name (Mandatory Field) 4) ATTENTION: List the Person to notify when transfer is identified (Mandatory) 5) If funds are for a specific project, list Project Name 6) Use any other identifier that would be useful Updated 11/2009 Reviewed 12/2011 Page 5 of 5