International Wire Transfer - Know more about International Wire Transfer.

Several centuries ago, transferring money from one country to the other seems to be impossible. Nevertheless, traders and individuals alike have been doing it but the risk factor was very high and the time required does not only involve days but months and years. Today, due to technological advancement, fund transfers can easily be done even in just a few hours. Thanks to International Wire Transfer.

An international wire transfer is a way of sending money from one financial institution to another at a specified fee. This can be done by transferring funds through a bank or by simply doing it with money exchange establishments capable of doing various international wire transfer methods.

Process

International money wire transfers are the fastest method for moving funds from one bank account to another account. The process is summarized as follows:

• When you approach your bank to transfer funds from your existing account to another account whether locally or internationally, your bank will send a message to the receiving bank. This message is sent securely and reliably exchanged through a financial messaging network. An example of this secure network that allows the process of international wire transfers is the Society for Worldwide Interbank Financial Telecommunication or better known as SWIFT. Another example of a fund transfer system that will efficiently enable financial institutions to do international money wire transfer is the Fedwire. Fedwire is operated by Federal Reserve Banks.
  
  
• The message that was sent using the secure network to effect the international money wire transfer will also include instructions for settlement. Once the message has been acknowledged by the receiving bank, it will take several hours for the actual transfer of the funds.
  
• The banks involve in the international money wire transfer should have a reciprocal account with each other. If the receiving bank does not have such account, the payment should be sent to a partner or correspondent bank that has such account, and then forwarding the funds to the destination bank.

Security

Bank-to-Bank international money wire transfer is considered as the safest method for international payment. Unlike other international transactions, the sending and receiving parties are obliged to present their individual identification. In addition, since the international wire transfer is done through a highly reliable and secure network, the message that is being transmitted from one bank to the other is encrypted.

International wire transfers made through other financial institutions aside from banks, such as cash offices, are designed in such a way that you can transfer money to an individual whom you do not even know. This method is even utilized by scammers posing to be a legal entity as a recipient of your funds. Yet their identity is actually fabricated including credentials shown when claiming the funds from the cash offices after the international money wire transfer has taken place.

Ways to do International Wire Transfer

International money wire transfer can be done through cash offices or through bank-to-bank transactions.

Cash Offices. Western Union is one of the largest companies that offer international money wire transfer services. It was established in 1851 in New York. It was initially based in the US, and then expanded internationally in the year 1989. Western Union which is not affiliated to any financial institution is a stand-alone company. Individuals who want to transfer or receive money do not need an account with them or with any bank. In addition, fund recipients are not obliged to show any identification when claiming money.

This method has generated several concerns and controversy. As previously mentioned, this can be a mode of transaction in funding scams. Aside from that, this can also be used to fund terrorist activity. Hence, all international wire transfers in the United States are monitored by the Office of Foreign Assets Control or OFAC. If a transaction is being suspected in funding terrorist organizations or the international money wire transfer is done for a payment to a country or entity that is presently under sanctions by the United States government, the transaction should be blocked and the funds should be frozen.

Bank-to-Bank Transactions. For international transactions, these are done using the SWIFT system previously discussed. This type of international money wire transfer is by far, the safest way in moving funds from one account to the other irregardless of country as long as the sending and receiving banks have their own Bank Identification Codes or SWIFT Codes.

Swift Codes

These codes are widely used in international wire transfers. Banks are assigned with an 8-11 character – code which is used as a unique bank identifier. Let us take for example Bank of America in San Francisco, California. The SWIFT Code for the bank is BOFAUS6SSFX which is made up of the following:

• First four characters – this is the bank code and should only be letters. Thus, for this case, “BOFA” means Bank of America
• Two characters – this is the country code, which is “US” for this example. These two characters should only be letters.
• Two characters – the location code and can be in letters or digits. “6S” for this case.
• Three characters – these characters denote the branch code, which is optional. It can also be in letters and/or digits. The location of this bank is in San Francisco California, thus, the code “SFX”

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