What the hell is Swift Code?

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1. Ever heard of financial messages? Well, such a thing does exist. Letters of credit, electronic payments and securities transactions between member banks worldwide all comprise financial messages. “SWIFT” which stands for “Society for the Worldwide Interbank Financial Telecommunication” is a cooperative organisation founded under the leadership of CEO Carl Reuterskiöld in 1973 in a 40 square meter office in Brussels, Belgium with just a handful of people and which provides financial messaging and transaction processing services for over 11 000 financial organisations located in 200 countries and territories worldwide.

2. Carl Reuterskiöld was Vice President of the International Banking and Card Division for Systems And Communication Worldwide at American Express prior to him becoming CEO of SWIFT. 3 years after the launch of SWIFT, Carl inaugurated the first operating centre for SWIFT in The Netherlands and within 5 years, 10 million messages had been exchanged in less than 12 months. Prior to his passing at the age of 83 in 1983, he took what seemed an impossible mission – to bring banks that compete together, to cooperate – to standardise the way banks communicate with each other, to harness computers in ways never foreseen and to create a global network.

3. SWIFT’s main objectives and essential functions are to:-

3.1 promote and develop standardised global interactivity for financial transactions; and

3.2  deliver these “financial messages” quickly and securely.

4. When transacting worldwide, SWIFT has identified the 2 (two) prime concerns / considerations that global enterprises have; they need their transactions to be (1) processed timeously (if not instantly), particularly given the volatility of exchange rates across the world and the effect that such uncertainty has on financial persons, and (2) as secure as possible, for reasons that are self-evident.

5. Financial organisations worldwide have adopted the SWIFT code (also known as “BIC” – Bank Identifier Code), which is a Standard Format Bank Identifier used to easily identify the country, bank and branch that an account is registered to when making payments. So when money is being transferred to a recipient in a different country, the transferee will be asked to supply the SWIFT code so as to ensure that the money reaches the correct recipient and a secure payment transaction is completed.

6. SWIFT code is made up of 8 or 11 letters and numbers and are ranged in an order depicting (1) 2 character bank codes, (2) 2 character country codes and (3) 2 character location codes. Where can one find a SWIFT code? These SWIFT codes are easy to pick up on either the recipient’s bank statement (they will need to provide you with their bank’s SWIFT code) or alternatively by visiting the recipient’s bank’s website. SWIFT code is not to be confused with banking details. Banking details will still need to be provided, the SWIFT code simply ensures that the money being transferred to the allocated bank account reaches the correct country, bank and branch securely.

7. SWIFT has become the industry standard for the format in financial messages. What a wonderful invention indeed!

 

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Please feel free to contact Brian Kahn for further information or specific and detailed advice. Errors and omissions excepted (E&OE)

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