| Wire Transfer |
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HISTORY Although the genesis of the idea dates as far back as the Giro , the modern wire transfer was a product of the telegraph companies, which made it possible to wire a money order from one office to another. Later, it became possible to wire money between banks, which is essentially the same process as the Giro . OVERVIEW OF PROCESS Bank wire transfers are often the most expedient method for transferring funds between bank accounts. A bank wire transfer is effected as follows:
REGULATION Bank transfer is the most common payment method in , however international wire transfers outside this limited scope can be quite expensive. In the United States , wire transfers within the country are governed by the following regulations:
SECURITY FEATURES Wire transfer, done bank-to-bank, is considered the safest international payment method. Both account holders must have a proven identity, and there is little possibility of a chargeback, although wires can be recalled. Additionally, information contained in wires is transmitted securely through encrypted communications methods. The price of bank wire transfers vary widely depending on the bank and its location, and in some countries the fee associated with the service can be costly. Wire transfers done through cash offices, however, are more-or-less anonymous and designed for funds transfer between persons who trust each other. It is unsafe to send money by wire for an unknown person to be collected at a cash office. The receiver of the funds may, after collecting them, simply disappear. This method of Scam has been often used especially in so-called Nigerian letters, also known as Advance Fee Fraud or a "419 scam". Transfers in the United States are subject to monitoring by the Office Of Foreign Assets Control , or OFAC. OFAC monitors information provided in the text of the wire to determine if money is being transferred to terrorist organizations or countries or entities currently under sanction by the United States government. If a financial institution suspects that funds are being sent from or to one of these entities, they must block the transfer and freeze the funds. {Link without Title} METHODS OF TRANSFER Western Union One of the largest companies that offers wire transfer is Western Union (minimum of £25 in the UK , or $15 in the US ). Western Union began in 1851 in Rochester, New York , and became the preeminent telegraph transfer service. It also introduced Telex, which was a predecessor of today's wire transfer services and is still used by some banks and business entites. Initially based in the United States , the company expanded operations internationally in 1989 . {Link without Title} . Western Union is a stand-alone entity and is not affiliated with a financial institution. Individuals who transfer or receive money with Western Union do not need to have an account with Western Union, or any financial institution. Instead, transfer instructions are sent into a central system, and the recipient can pick up the funds at a Western Union office in their area. Western Union transfers can also be initiated online. {Link without Title} Concern and controversy about Western Union transfers has increased in recent years, due to the increased monitoring of money laundering transactions, as well as concern about terrorist groups using the service, particularly in the wake of 9/11. Although Western Union keeps information about senders and receivers, some transactions can essentially be done anonymously (ie, the receiver is not always obligated to show identification.) {Link without Title} Country-to-country wire transfers Most international, country-to-country transfers are executed using the SWIFT system. The co-operative society Society For Worldwide Interbank Financial Telecommunication , or SWIFT, was founded in 1974 by seven international banks. SWIFT operates a world wide network to facilitate the transfer of financial messages. Using these messages, banks can exchange data for transfer of funds between different financial institutions. The Society's headquarters are situated in La Hulpe, on the outskirts of Brussels. S.W.I.F.T. also acts as a United Nations sanctioned International Standards Body (ISO) for the creation and maintenance of financial messaging standards. Article 3 of S.W.I.F.T. states:
Each financial institution is provided an ISO 9362 code, also known as a Bank Identifier Code, BIC Code, or SWIFT Code. These codes are generally eight characters in length. {Link without Title} As an example, Deutsche Bank is an international bank; its head office is based in Frankfurt, Germany. Its SWIFT code for its primary office is DEUTDEFF:
Using an extended code of 11 digits (if the receiving bank has assigned branches or processing areas individual extended codes) allows the payment to be directed to a specific office. For example, DEUTDEFF500 would direct the payment to an office of Deutsche Bank in Bad Homburg. European banks making transfers within the European Union also utilize the International Bank Account Number , or IBAN. {Link without Title} Transfers within the United States Banks within the United States utilize SWIFT to make payments to banks in countries outside of the United States. For bank-to-bank transfers that are conducted within the United States, the Fedwire system is used. This system utilizes the Federal Reserve System and its assignment of Bank Routing Numbers (in a similar way to how Automated Clearing House , or ACH payments, use those numbers to effect the payment and collection of checks). EXTERNAL LINKS |
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