Foreign Wires – Here’s how to wrangle the complexities!

Kristi Von Tickner, VP/Financial Services Manager, Scott Valley Bank

By Kristi Von Tickner, VP/Financial Services Manager, Scott Valley Bank

Sending foreign wire transfers can be a complicated and sometimes confusing task. Below is a breakdown of the terms, rules and requirements for currency payments to foreign countries. The information does not cover all currency payment rules, but focuses on the top questions regarding foreign wire payments.

Types of wires:
Wires can be sent in US dollars or they can be exchanged to the local currency (foreign) of the beneficiary. Sending wires in the foreign currency is easy to do and can be less expensive than US Dollar wires. The benefits of sending a wire in the foreign currency are:

  • Saves time: When you send a wire in foreign currency the recipient does not have to wait for the overseas bank to accept it and convert it to local currency. Wires sent in foreign currency move directly to the foreign beneficiary and are less subject to delay than US denominated wires. 
  • Reduces risk: By sending a wire in foreign currency you can lock in the exchange rate, secure your order and know the full cost of the transaction before the wire is sent.
  • Gain competitive advantage: For businesses, you may be able to negotiate a better price with your overseas business partner. By receiving a wire in local currency, the beneficiary will avoid assuming the risks of currency rate fluctuations and the costs of foreign exchange.

International CommerceHow it works:
International Wires are sent using an international communications system known as SWIFT and settlement is arranged between individual banks. The Society for Worldwide Interbank Financial Telecommunication (SWIFT) is an industry-owned co-operative providing secure, standardized messaging services and interface software to over 8,000 financial institutions in 207 countries and territories.

Wires going to foreign countries require different numbers depending on the receiving foreign country. All wire transfer payments destined for Europe should include the SWIFT Bank Identifier Code (SWIFT BIC), International Routing Code (IRC) as applicable, and for participating countries the beneficiary’s International Bank Account Number (IBAN). Mexican banks require a Clave Bancaria Estandarizada (CLABE) number in addition to the SWIFT BIC.

  • SWIFT Bank Identifier Code – Each bank that is a member of SWIFT has its own unique code to identify the bank to which the wire is en route. An 8 or 11 character SWIFT BIC is a unique series of alpha numeric characters that help to identify a specific financial institution.
  • International Routing Code – Some countries throughout the international banking community have created IRCs, which are used in combination with the SWIFT BIC to aid in routing the payment through a main office to a branch.
  •  International Bank Account Number – The IBAN varies by country/institution. It consists of a country code, branch code and the beneficiary’s account number. Warning! Only the bank servicing an account can provide the correct IBAN of that account. 
  • Mexico CLABE account number – In addition to the SWIFT BIC, Mexican banks now require an 18 digit CLABE account number be added to the Beneficiary instructions to ensure payment. The CLABE number is a replacement for an account number and is required on all Mexican Peso and USD payments sent to Mexico. 
What information is needed?
To send a foreign wire you will need the following:

  • Beneficiary name and country
  • Beneficiary account number and bank details (see guidelines below)
  • Any details about the transaction that you wish to be transmitted to the beneficiary
Foreign Routing Codes:
  • Canada – A transit code is required which identifies the specific bank and branch of the beneficiary. The code is 9 numeric characters in length: 4-digit institution code plus a 5 digit branch code.
  • India- An IFSC (India Financial System Code) is required. The IFSC is 11 alpha-numeric digits and consists of 4 characters (alpha) identifying the institution, a default zero, and 6 digits (numeric) identifying the branch. Wires to India also require “purpose of payment” (i.e., family remittance, personal remittance, salary remittance, etc.) Without the purpose of payment, the wire will likely be delayed, credited to the account less additional fees or returned to the sender.
  • Israel- A bank, branch name and branch code or complete branch address is required.
  • Japan- The branch name and address or an 11-digit SWIFT BIC code is required.
  • United Kingdom- An IBAN is strongly recommended. A sort code is required if the IBAN is not available. The sort code is 6 numeric characters in length and identifies the specific branch of the bank where the beneficiary holds their account.
  • Australia- A BSB (Bank, State & Branch Code) number is strongly recommended. The BSB number is a unique number, which identifies both the bank and the branch of a particular Australia account and is 6 numeric characters in length.
  • Philippines- A SWIFT code or complete address of the beneficiary bank is required.
  • All other countries- For all other countries not listed above, only a SWIFT code and beneficiary name, country and account number are required.
Foreign Wire Account Numbers:
  • Europe- It is strongly recommended that both an IBAN (International Bank Account Number) and a SWIFT BIC (SWIFT Bank Identifier Code) be included in the instructions for the most accurate delivery of funds to the beneficiary.
  • Mexico –A CLABE is required
  • All other countries – For countries outside of Europe and Mexico, a beneficiary account number is required.

In all cases, the beneficiary of an international wire will need to ask their bank which codes are necessary to successfully receive a wire. Sending international wires without the SWIFT BIC, IRC, IBAN or CLABE can delay the wire and may cause additional fees to be assessed.

Receiving a wire from a foreign country:

It is far less complicated to receive a wire from a foreign country. Simply provide the sending party with the following information: Scott Valley Bank, ABA 121106252, your name and address, your SVB bank account number and details, if any, related to the transaction that you want the sender to include. The sending party’s Financial Institution will forward the payment to an International Correspondent Bank which will in-turn route the funds to Scott Valley Bank for final credit to your account.

I hope that the information provided above brings clarity to the complex process of International Wires. The staff at each of our locations is available to assist you with your wire questions and requests.

View Scott Valley Bank - The Vault - August 2012