Demystifying Swift Codes: How They Facilitate International Financial Transactions

You’ll likely be asked for a SWIFT code when making a foreign bank transfer, but many people don’t understand this code and how it works. This article is the solution for such people. It will explain how SWIFT codes work and where to find the correct one for your banking institution.

What Is A SWIFT Code?

SWIFT stands for Society for Worldwide Interbank Financial Telecommunications. It is the standard messaging system that global banks use to communicate with each other. This system is managed by a Belgian cooperative society for global banks.

Every banking institution connected to the SWIFT network has a unique Bank Identifier Code (BIC), fondly called a SWIFT code. It’s similar to how every human connected to a telecoms network has a unique phone number. The BIC is how banks identify each other and pass instructions via the SWIFT network.

How Does It Look?

It consists of eight to 11 characters in this format: AAAABBCCDDD.

• The first four characters (AAAA) point to the bank’s name. It’s usually an abbreviation of your institution’s formal name.
• The next two characters (BB) tell you what country the banking institution is located in.
• The following two characters (CC) identify the bank’s headquarters.
• The last three characters (DDD) point to a specific banking branch.

Here’s an example: SNTRUS3ACOL.

• SNTR signifies Truist Bank, formerly known as SunTrust Bank.
• US stands for the United States of America.
• 3A identifies Georgia, an American state.
• COL identifies a specific Truist branch in Atlanta, Georgia.

How Do SWIFT Transfers Work?

SWIFT is the network for executing financial transactions and payments, and every bank connected to this network has a unique BIC. When you initiate a foreign transfer, your banking institution contacts the recipient’s institution via their BIC, instructing them to deposit money in the recipient’s account. It then deducts the equivalent amount from your account, completing the transfer.

It works similarly if you’re the recipient of a foreign transfer. The sender’s bank will contact your banking institution via its SWIFT code, instructing them to deposit money into your account. It then deducts the equivalent amount from the sender’s account, completing the transfer. 

Where Can I Find My BIC?

• Ask the recipient: You can ask the recipient of your intended foreign transfer to provide their BIC. Information from the horse’s mouth is the most reliable, after all.
• Official website: You can check your financial institution’s website for a list of BICs for all branches.
• Third-party websites: Many third-party websites aggregate SWIFT codes for different global banks and display them to readers. They organize this information into a database that you can effortlessly search. A Google search will lead you to many of these websites.
• Customer service: You can call your bank’s customer service line and ask a support representative for the BIC of your specific branch.
• Bank statement: You can request a formal banking statement anytime from your institution, and the BIC will likely be printed at the top or bottom of the statement.

What Happens If You Enter the Wrong BIC?

Entering the wrong BIC means your transfer won’t reach the intended recipient. If the code you provided does not exist, the transfer will automatically reverse to your account. However, if you provided a code pointing to another bank, your money might get stuck because the intended account does not exist on their database. In this case, you can contact your bank to initiate a reversal, but fees may apply. 

Conclusion

We have explained precisely how SWIFT codes work. This system facilitates seamless foreign transfers and has been a boon to the global economy. At this point, you should understand how this system works enough to explain it to another person.