Technical Question About Swift Transfers

[Jingthing]

This is a hypothetical but I'm curious about the mechanics of this.

OK, let's say you do a SWIFT transfer from your home country and you accidentally gave them a slightly wrong account number on the target account, like one digit wrong (or they type it in wrong, etc.).

So the SWIFT sender gets your order and does the SWIFT, and the money gets deducted from your source account but is not yet showing in the target account.

The target bank sees the error and rejects the transfer. So, then what? They send the money back or does it get thrown on some kind of black hole problem pile to become a case to be solved? I guess what I'm really wondering mechanically is that if BEFORE the SWIFT sender sends the SWIFT that they first do some kind of electronic communication with the target to verify that the target account (and matching name) actually EXISTS?

Edited May 5, 2011 by Jingthing

[seaeagle]

I had a similar problem a few years ago.

Sent some money to Mother-in-Law for her airfare to UK. Transfer was from Barclays Bank to Bangkok Bank, and a few days later it arrived back in my Barclays account, minus about £20.

I enquired what was wrong, and Barclays informed that it had been rejected by Bangkok Bank due to incorrect details. Bangkok Bank had deducted the equivalenet of around £20 as their charges for being unable to apply the credit and return it to Barclays.

Upon checking things out, it was a 'technicality' with the name spelling. "Amnuay" was the spelling we've always used (on passport, too), but the account name was spelt "Amnuai". Account number, home address etc all checked out, but this small difference caused it to be returned and then re-sent again.

Learning point - ensure it's absolutely SPOT-ON.

[Jingthing]

Thanks for that. So it sounds based on that one story that the SWIFT senders send the wire without verifying everything about the source account and then the target sends it back if the details aren't good enough. I still wonder what percentage of wires just basically disappear. Obviously that would spark a complaint though!

[seaeagle]

Didn't answer the latter part of your question before. Sorry.

No, there will be no pre-checking that the target account actually exists. People do electronic fund transfers because they want speed of payment. Checking would seriously delay a transfer.

An example of such longwindedness would be similar to the payment I made.

1) Go into a domestic BRANCH of UK bank.

2) They take potential payment instructions and send to the INTERNATIONAL department.

3) INTERNATIONAL department contact the INTERNATIONAL department of the other bank in Bangkok.

4) Now, don't forget you'd be hitting timezone delays, at this point.

5) They contact the DOMESTIC branch somewhere in a province in Thailand.

6) The DOMESTIC branch responds to their INTERNATIONAL department to say that the account does / does not exist.

7) INTERNATIONAL department relays this information to the INTERNATIONAL department of the UK bank.

8) More time delays, probably.

9) INTERNATIONAL department in UK bank tells DOMESTIC branch that things are okay / not okay.

10) So, now is the point at which you actually START to make the electronic payment.

Given the time that points 1 - 9 would take, and the twice the communication / man-effort, you can see why there's no checking first. It really is up to the sender to ensure that they provide correct details.

[manarak]

Thanks for that. So it sounds based on that one story that the SWIFT senders send the wire without verifying everything about the source account and then the target sends it back if the details aren't good enough. I still wonder what percentage of wires just basically disappear. Obviously that would spark a complaint though!

It is not possible to verify that the target account exists, because that would be a breach of banking confidentiality rules.

Edited May 5, 2011 by manarak

[seaeagle]

Thanks for that. So it sounds based on that one story that the SWIFT senders send the wire without verifying everything about the source account and then the target sends it back if the details aren't good enough. I still wonder what percentage of wires just basically disappear. Obviously that would spark a complaint though!

Cynically, and sadly, I think it's a bit of a money-making exercise on the part of the Thai bank, too.

Can't speak for the rest of banking mankind, but I know that if a similar situation occured in the UK, the bank would investigate first. If everything checked out, apart from say one digit in an account number, the customer would be contacted. If the customer turned around, and said he was expecting an international payment from such and such, for the amount recieved, then that would be fine.

Here, doing that type of investigation means 'work', and it's easier just to return it from where it came!

[tomallison]

I had a similar problem a few years ago.

Sent some money to Mother-in-Law for her airfare to UK. Transfer was from Barclays Bank to Bangkok Bank, and a few days later it arrived back in my Barclays account, minus about £20.

I enquired what was wrong, and Barclays informed that it had been rejected by Bangkok Bank due to incorrect details. Bangkok Bank had deducted the equivalenet of around £20 as their charges for being unable to apply the credit and return it to Barclays.

Upon checking things out, it was a 'technicality' with the name spelling. "Amnuay" was the spelling we've always used (on passport, too), but the account name was spelt "Amnuai". Account number, home address etc all checked out, but this small difference caused it to be returned and then re-sent again.

Learning point - ensure it's absolutely SPOT-ON.

I had the same problem some years ago. On a requested transfer, by letter as I was outside the country,from my UK account to a Bangkok Bank account. The funds were SWIFTed from the UK and then returned to my account. The reason was that all the receivers info was correct with the exception of the first name spelling. When I learned of this problem I corrected it by telephone (still abroad). The tranfer was then completed.

As stated transfer details nust be 100% correct.

[Jingthing]

Thanks for all that. I think I've got it!

[aurelius]

Thanks for that. So it sounds based on that one story that the SWIFT senders send the wire without verifying everything about the source account and then the target sends it back if the details aren't good enough. I still wonder what percentage of wires just basically disappear. Obviously that would spark a complaint though!

Cynically, and sadly, I think it's a bit of a money-making exercise on the part of the Thai bank, too.

Can't speak for the rest of banking mankind, but I know that if a similar situation occured in the UK, the bank would investigate first. If everything checked out, apart from say one digit in an account number, the customer would be contacted. If the customer turned around, and said he was expecting an international payment from such and such, for the amount recieved, then that would be fine.

Here, doing that type of investigation means 'work', and it's easier just to return it from where it came!

Lets look at this scenario from the other point of view - if the bank called a customer and said that there's some money coming to your account; and the lucky owner said "well yes, I'd love that" and the funds were given to that (incorrect) customer instead of the the real owner, wouldn't you as the sender be fairly p***ed off? The bank gets an incoming instruction - the name may be wrong, the account number may be wrong - who can tell which digit is wrong - could be any one or more of the 10+ digits on there. There is really only one choice and that is to return it to the sender. Thailand is just more difficult because of the random way of spelling names and therefore the higher likelihood of mismatches.