Wire Risks

What are Wires?

Wires are an electronic means of transferring money between financial institutions both nationally and internationally. The funds are transferred nearly instantaneously, so there is little financial risk. That said, wires are also irreversible, so extra caution should be applied when transmitting funds via wire to ensure that they are being sent to the correct entity. There are two key wire networks:

FED Wire - Operated by the United States Federal Reserve sends money electronically between registered U.S. banks and financial institutions.
SWIFT Wire - Operated by the Society for Worldwide Interbank Financial Telecommunications, this wire network connects banks and financial institutions globally.

Mitigating Risk

It is recommended that when sending a wire, the platform should incorporate several checks in the user interface:

Confirmation: Have the client user review and confirm the amount and recipient information that they have entered before proceeding.
Verification: Have the client perform MFA (multi-factor authentication) to confirm their identity before processing the wire request.

Failures

Although FED Wires and SWIFT wires do not fail due to a lack of funds, they can fail for the following reasons:

FED Wire Failure Codes

As stated in the Federal Reserve Banks’ Operating Circular 6, a Federal Reserve Bank may reject a
payment order for any reason. The FED Wire system does not have its predefined return codes for reject reasons, instead the reason is returned in a more verbose text string.


UTA: Unable to Apply	Cannot post payment in an account, could be due to account nonexistent, or closed, or outside of limits
INV ACCT ORG	Invalid account organization/structure (not only account doesn't exist but account number doesn't corresponds to the format or it's also not valid to receive wires)
Invalid Routing Number	The counterparty routing number is not valid.
AccountFrozen	The counterparty account is frozen.
AccountClosed	The counterparty account has been closed.
ACH ONLY	The account doesn't allow wires, only ACH
DUP PMT	When you send money twice by mistake or two wires with same amount same day and same account/beneficiary are detected/disallowed
NAME MISMATCH BENF DETAILS MISMATCH	When the name/account doesn't corresponds or the address was validated (by human) and is wrong
Fraud Suspected	The Receiving Bank RDFI suspects the transfer to be fraudulent
Wire Rejected	The counterparty rejected the wire payment.
ClientRequest	The client has requested the wire payment to be rejected.
Improper Format	tag {8200} Unstructured Addenda Information is too long (9K characters)

SWIFT Wire Status Codes

Below are the standard SWIFT status codes.

reasonCode	statusDescription	remarks
G000 .	Delivered to the next bank	The payment has been forwarded to the next participant bank in the SWIFT network. It can be either credited to the beneficiary directly or passed to the next bank
G001	Delivered to the next bank (no tracking)	This often suggests the user may not receive GPI updates beyond this point and will receive a final terminal status.
G002	Pending credit may not be same day	Often it means that the payment is under manual due diligence in the bank and settlement may take a few hours
G003	Pending receipt of documentation from the beneficiary.	This often suggests an action on the beneficiary or beneficiary bank. The sender may contact the beneficiary in case of delays or can ensure that the beneficiary details provided are correct.
G004	Pending receipt of funds from the previous bank.	This suggests the forward bank (next SWIFT network bank) has received an instruction to credit the funds to the beneficiary but it has not received the funds yet. Cover payment is missing but it is expected to arrive soon. The funds are expected to reach the beneficiary upon arrival of cover paymen
G005	Delivered to beneficiary bank as GPI.	This suggests that the payment will be credited soon.
G006	Delivered to beneficiary bank as non GPI	This suggests that the payment will be credited soon.

Recalling a Wire

Recalling a wire is a process that requires us to contact the receiving bank and requesting them to reverse the wire back to us. This process is manual and the likelihood of success is low. It is also important to understand that financial institutions have no requirement to respond to our recalls. For that reason, we recommend Originating Wires Safely. But in rare situations that wires still need to be recalled, please create a ticket requesting a wire recall by emailing Mbanq Support.