Money Transfer

Wire transfer
Wire transfer is a method of transferring money from one entity to another. A wire transfer can be made from one entity's bank account to the other entity's bank account, and by a transfer of cash at a cash office.
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. Therefore, the term giro is still used for it in many other European countries.
Process
Bank wire transfers are often the most expedient method for transferring funds between bank accounts. A bank wire transfer is effected as follows:
· The sending bank transmits a message, via a secure system (such as SWIFT or Fedwire), to the receiving bank, requesting that it effect payment according to the instructions given.
· The message also includes settlement instructions. The actual transfer is not instantaneous: funds may take several hours or even days to move from the sender's account to the receiver's account.
· Either the banks involved must hold a reciprocal account with each other, or the payment must be sent to a bank with such an account, a correspondent bank, for further benefit to the ultimate recipient.
Regulation
Bank transfer is the most common payment method in Europe, with several million transactions processed each day. Debit cards are used extensively to pay in stores, while monthly bills are usually paid with a direct transfer (by cellular phone or Internet, or at the bank or an ATM). In 2002, the European Commission relegated the regulation of the fees that a bank may charge for payments in Euros between European Union member countries down to the domestic level, resulting in very low or no fees for transfers within the Eurozone; wire transfers between this zone and external areas can be expensive.
In the United States, domestic wire transfers are governed by Federal Regulation J and by Article 4A of the Uniform Commercial Code.
Security
Bank-to-bank wire transfer is considered the safest international payment method. Each account holder must have a proven identity. Chargeback is unlikely, although wires can be recalled. Information contained in wires is transmitted securely through encrypted communications methods. The price of bank wire transfers varies greatly, depending on the bank and its location; in some countries, the fee associated with the service can be costly.
Wire transfers done through cash offices are essentially anonymous and are designed for transfer between persons who trust each other. It is unsafe to send money by wire to an unknown person to collect at a cash office: the receiver of the money may, after collecting it, simply disappear. This scam has been used often, especially in so-called Nigerian letters, also called advance fee fraud or 419 scams.
International transfers involving the United States are subject to monitoring by the Office of Foreign Assets Control (OFAC), which monitors information provided in the text of the wire to ascertain whether money is being transferred to terrorist organizations or countries or entities under sanction by the United States government. If a financial institution suspects that funds are being sent from or to one of these entities, it must block the transfer and freeze the funds.
Methods
Western Union
One of the largest companies that offer wire transfer is Western Union (minimum of £25 in the United Kingdom, or $15 in the United States). 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 entities. The company expanded operations internationally in 1989.
Western Union is a stand-alone entity and is not affiliated with a financial institution. Individuals who transfer or receive money through Western Union need not have an account with Western Union or any financial institution. Instead, transfer instructions are sent into a central system, and the recipient can collect the funds at a Western Union office in his or her area. Western Union transfers also can be initiated online.
Concern and controversy about Western Union transfers have increased in recent years, because of the increased monitoring of money-laundering transactions, as well as concern about terrorist groups using the service, particularly in the wake of the September 11, 2001 attacks. Although Western Union keeps information about senders and receivers, some transactions can be done essentially anonymously, for the receiver is not always required to show identification.
International
Most international transfers are executed through SWIFT, a co-operative society, founded in 1974 by seven international banks, which operates a global network to facilitate the transfer of financial messages. Using these messages, banks can exchange data for funds transfer between financial institutions. SWIFT's headquarters are in La Hulpe, on the outskirts of Brussels, Belgium. The society also acts as a United Nations–sanctioned international-standards body, for the creation and maintenance of financial-messaging standards.
Each financial institution is provided an ISO 9362 code, also called a Bank Identifier Code (BIC) or SWIFT Code. These codes generally are eight characters long. For example: Deutsche Bank is an international bank, with its head office in Frankfurt, Germany, the SWIFT Code for which is DEUTDEFF:
· DEUT identifies Deutsche Bank.
· DE is the country code for Germany.
· FF is the code for Frankfurt.
Using an extended code of 11 digits (if the receiving bank has assigned extended codes to branches or to processing areas) 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 use the International Bank Account Number, or IBAN.
United States
Banks in the United States use SWIFT to make payments to banks in other countries.
Domestic bank-to-bank transfers are conducted through the Fedwire system, which uses the Federal Reserve System and its assignment of routing transit number, which uniquely identify each bank.