Everything You Need To Know About Wiring Money Overseas
A reader wrote this
week to say:
“I went to my bank
branch to initiate a wire transfer on Monday. The teller had to call over the
branch manager to help with the paperwork. Once the manager saw I was
transferring money to Panama, she told me they wouldn’t be able to do the wire
transfer. When I asked why not, she said because investing in Panama is too
risky.”
A similar tale from
another reader:
“I tried to wire money
to Panama for a property purchase, and the teller told me they couldn’t do the
wire because they didn’t have a branch in Germany. The Panama bank uses a
German bank as their intermediary, but isn’t that what they (an intermediary
bank) are there for—to accept international transfers?”
I share the
frustration these and the other readers I’ve been hearing from are feeling.
Recently, two Los Islotes investors tried to wire money for their lot
purchases. The first client’s funds never made it because they were rejected by
the Panama bank’s intermediary bank and returned to the client almost two weeks
after the wire had been initiated.
The second client’s
funds arrived the next day, after having passed through the same intermediary
bank.
The difference? Who
knows?
Every Bank Is Different and So Are Their Processes
Every bank has its own
way of handling wires, but wiring money from one money-center bank to another
money-center bank should be straightforward regardless of the banks involved as
minimal information is required. However, sending money from a non-money-center
bank, as the first reader I quote above was trying to do, to another
non-money-center bank in a foreign country is a different story.
This is why banks work
with intermediary or correspondent banks, to facilitate international transfers
of funds. Unfortunately, this means another layer of information, including the
recipient bank’s account number with the intermediary bank. If any of the
information is missing or not included in the instructions in the expected
format, the wire can be rejected, as it was for my Los Islotes buyer.
Most folks don’t send
international wires on a regular basis, and, even if you do, it’s hard to keep
up with all the particulars.
The easiest strategy these days is to initiate a wire
online. The trouble is that online systems don’t work
when trying to send a wire using a bank that requires several layers of
intermediate and final beneficiary details. In a situation like that, you have
to go into a bank branch to initiate the transaction in person.
When you do, don’t
stand in line and wait your turn to speak with a teller. The typical bank
teller in the typical neighborhood bank has never sent an international wire
and probably wouldn’t be able to find the transfer’s destination on a map. You
want to speak instead with a personal banker or a manager.
Engage the
conversation confident in the fact that your bank can, indeed, wire your funds
where you want them to go. Don’t let the banker you speak with try to tell you
otherwise. Also, don’t let the banker try to talk you out of the transaction
altogether. It’s your money, not his. What you do with it is none of his
business (unless he’s also your money manager). You don’t have to justify your
plans to him or anyone else (well, maybe to your spouse).
Wire Transfer Terminology and Fundamentals
Here are some
fundamentals and some terminology for reference.
U.S. banks use what is
called an ABA number, which
identifies banks within the U.S. banking system. If you’re transferring money
from one U.S. bank to another, all you should need is the recipient bank’s ABA
number and the beneficiary’s name and account number (maybe their address,
too).
International banks
are identified by what’s referred to as a SWIFT code. A SWIFT code is all letters, no numbers, and it should be all you
need for most international wire transfers. Sometimes the sending bank will
require the intermediary bank’s details, as well, including that bank’s SWIFT
code.
In Europe, the system
is much simpler in my view and is based on the IBAN number. This is an aggregated number that includes the bank
identification and the recipient’s account identification along with some other
numbers to guide the transfer through to the recipient. With an IBAN number,
nothing else is required for the money to arrive where it’s supposed to arrive,
though most banks still request account names for confirmation.
Sending a wire from
one currency to another creates further complications. Again, from a reader
last week:
“The bank says they
can’t send a wire to Singapore for me because they don’t have any Singapore
dollars.”
Another case where the
teller had no idea what he was talking about. The teller was correct when he
told your fellow reader that his bank didn’t have any Singapore dollars to
send, but that’s irrelevant. That’s what currency exchanges are for. In the
case of a small local or regional bank, it may be necessary for your banker to
contact his correspondent bank first, before initiating the wire, to get the
exact U.S. dollar amount required to send the specific foreign currency amount,
but don’t let your banker tell you he can’t send the wire at all. That’s just
not so.
When sending a wire
online, you typically can elect to transfer the funds in your currency or in
the currency of the recipient. Again, online is always easier when it’s an
option.
Back to the reader who
wrote in to say that his banker insisted he couldn’t wire money to Singapore.
Finally, thanks to the guy’s persistence, the banker came around and sent the
wire. However, he wired the U.S. dollar amount rather than the Singapore dollar
amount. Now the poor guy is due a refund in the amount of the extra Singapore dollars.
And now his banker is
now telling him the bank can’t accept a wire from Singapore.
So it goes.
