By Paul, CMA

Electronic Fund Transfer

Swift codes are handled by the SWIFT organization, and in particular from a

division called “SWIFT Standards”. SWIFT stands for “Society for Worldwide Interbank Financial Telecommunication” and is a member-owned cooperative that is used by the financial world to conduct business operations.

These codes were initially referred to as “swift codes” but were later standardized as BIC which stands for “Business Identifier Codes”. Both terms are used today and mean exactly the same thing.

What are SWIFT/BIC codes, and what do they mean?

The swift code is usually required by web banking applications for money

transfers between two different banks (that are members of the swift network).

We are not only asked to provide the beneficiary’s bank account number (or IBAN account number) that we want to send money to, but we must also provide the exact BIC code of the branch of the beneficiary’s bank.

Why do I need this code?

An SWIFT typically contains 1) First 4 character - Bank code 2) 5th & 6th character - Country code 3) 7th & 8th character - Location code 4) Optional - 9th to 11th character - Branch code

How does an SWIFT work? 

A swift code consists of 11 or 8 characters, which is the format standardized by

ISO (International Organization for Standardization). Here is an example code: CHASUS33XXX. This swift code is for the head offices of “JPMORGAN CHASE BANK, N.A.” in

the U.S.A. It can be broken down to four parts: CHAS - US - 33 - XXX

Understanding the code

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.

What is an IBAN? 

The IBAN has been introduced to help reduce problems with cross-border

transactions by providing a standard format for displaying and validating international bank account numbers.

Why is the IBAN so important? 

An International Bank Account Number typically contains 1) Two-character ISO country code 2) Two check digits for validation purposes 3) Domestic bank code 4) Account number.

How does an IBAN work? 

As per the requirements of FINCEN [Financial Crimes Enforcement Network],

the originating bank or the bank from where you initiate the wire transfer should keep records of all transfers that sum to the amount of $3,000 or more.

The essential information include the name and address of the person who transfers the funds, sum of payment, payment instructions, name and address of the receiver, his bank, his bank account number and other details which could help in the identification of the receiver.

It is also necessary to save intermediary bank information if the fund is transferred to an intermediary bank.

Tasks of Originating bank

An Intermediary bank comes into play when the originating bank does not

have links to the receiver’s bank. In such cases, it is necessary that the originating bank transfer the funds to the

intermediary bank that has links with the beneficiary bank. Here, the intermediary bank should save the information, as obtained from the

originating bank, plus the additional information about the transmitting bank, such as its name and address.

Note: It is not required of you to provide intermediary bank information when you choose to receive Wire Transfers in Local Currency.

Tasks of Intermediary bank

Once the payment reaches its destination, the beneficiary bank should acquire

adequate information about the receiver of the funds. This includes his name, address and intermediary bank information from

where the funds come.

Tasks of beneficiary bank

Fees levied on such transfers Provide the correct details Keep a track on bank wire transaction Ask your bank in prior to transfer

Instructions to follow

Bank wire transaction is not availed free for you. You might have to check with

your bank, to know about the fees charged for every transaction. The amount to be transferred and banks involved affects the potential amount

levied on you. You might have to pay more fees for international and overseas transactions

than regular ones.

Fees levied on such transfers

When you are asking somebody to credit money in your account from a

different bank, make sure to provide adequate and accurate details regarding your account.

This should include the bank routing number, your account number, name of bank and branch and exact name as it comes in the bank financial statement.

If any of the information goes wrong, you might not get the transfer completed in time.

Also, this might put you into complex money retrieval procedure.

Provide the correct details

You could ask the bank about the expected transfer time required, and report

if the money doesn’t reach you in the prescribed time period. You are sure to trace the transaction path this way and would know of any

undesirable dripping outs in the transmittance.

Keep a track on bank wire transaction

If you need the money in hand within one day or you have such demands, ask

your bank and confirm if this would work. You don’t have to worry about the money arrival and timings, once you have

dealt about this with the corresponding banks. Also, you might be able to contact the sender and make necessary steps, if the

transaction is not completed within the maximum time limit specified.

Ask your bank in prior to transfer

Many people use wire transfer as means for money laundering activities. Therefore, an intermediary bank and other financial institutions would monitor

these transactions and if anything suspicious were found with your wire transaction, the entire transaction would come under the scrutiny of Financial Crimes Enforcement Network.

This can occur, if the source or the destination in the process of wire transfer is suspicious.

Fighting money laundering measures