SWIFT Financial Telecommunication

SWIFT Financial Telecommunication

Q1. What is SWIFT?

SWIFT stands for Society for Worldwide International Financial Telecommunication.

This society operates world’s most largely used messaging network for financial messages across the world.
It started to establish standards for financial transactions and a shared data processing system and worldwide communications network



Q2. What is the standard message format for a SWIFT message?

A SWIFT message is divided into 5 parts
1. Basic header
2. Application header
3. User header
4  Text
5  Trailer

Each of the section starts with opening curly braces, followed by the section number and colon. For example the beginning of section 4 may look something like: {4:
BASIC HEADER:
The Basic header contains the information about the bank from which the message is initiated and sent via SWIFT network.
The Basic header block may look something like this:
{1:F01BOFIIE2DBXXX6749865131}.
Here {1: defines the beginning of Basic Header section. F01 defines that the following institution is a financial institution. The texts BOFIIE2DBXXX are called Bank Identifier Codes or BICS and defines the following:
The first 4 characters signify Bank Code. In our example it is BOFI – Bank Of Ireland.

The next 2 characters signify Country Code. Here it is IE which is Ireland.
The following 2 characters signify City Code. It is DB in our case. DB is for Durban.
The following single character is logical terminal code.
The last three characters signify the branch code in the corresponding city. When the last three characters are XXX – it implies we are referring the main branch of the corresponding city.

APPLICATION HEADER:
The section following the Basic header is the application header section. This may look something like:
{2:O1030733091023BBRUBEDDAXXX75630554950910230738U}
 This section basically conveys the following information:
Whether the SWIFT message is outgoing or incoming from SWIFT’s network perspective. If the first character after {2: is O then it implies that this is a message which has come into our payment processing system from SWIFT network. If the first character is I then it means that the message is coming from the bank described in section 1 into the SWIFT network.
The next 3 characters after ‘I’ or ‘O’ tells the type of message that follows in section 3, 4 and 5. This could be something like 103 or 202 or 910 etc. We will talk about these more later.
After this we also see some BIC. This is the BIC of the bank who is at the receiving end of the SWIFT message. This simply implies that SWIFT has to send this message to this the Bank defined in this BIC.

Text:
This section is tagged as {4:  and carries out the main information which will help in providing the financial service. For example, if the service is a customer to customer funds transfer, then this section will contain the information like
Detail of debit party
Details of bank of debit party
Date of transaction
Amount of transaction
Details of credit party
 Details of bank of credit party etc.
Example:
{4:
:20:PAYREF- TB54302
:32A:910103BEF1000000,
:50:CUSTOMER NAME
 AND ADDRESS
:59:/123-456-789
BENEFICIARY NAME
AND ADDRESS
-}


Trailers Block
General
Trailers are added to a message for control purposes, or to indicate that special circumstances apply to the handling of the message, or to convey special/additional information.  They may be added by the user or by the system.
Trailers always appear in block 5 of a SWIFT message.  Each trailer appears as a separate sub-block and is bounded by block delimiters.
Each trailer begins with a three letter code, followed by a colon, followed by the trailer information itself.
For example, block 5 of a user-to-user message, sent with an authentication trailer and checksum trailer, may appear as:
{5:{MAC:41720873} {CHK:123456789ABC}}

Q3. What are the most commonly used SWIFT Messages? 

Category 1: -Customer to customer payments and cheque.
Category 2: Bank to Bank Payments
Category 3: Treasury Markets – Foreign Exchange, Money Markets & Derivatives
Category 8: Travellers Cheque
Category 9: Cash Management & Customer Status. This category can also handle propriety messages.


Q4. What is MT 103?

It is a single customer Credit Transfer.MT 103 is a message type for customer to customer payments between banks of either same or different currency. Any funds transfer between two individuals is achieved through MT 103 or MT 103+.


Q5. What is the difference between MT 102 and MT 103?

MT 102 is similar to MT 103 except that in a MT 102, we can send multiple MT 103s.



Q6. What is MT 202?

It is a general financial institution transfer wherein funds transfer between two banks is facilitated.


Q7. What is MT 201?

Multiple MT202s in to a single message is facilitated in MT 201.


Q8. What are Proprietary Messages?

Proprietary messages are those messages that Contains formats defined and agreed to between parties (financial or non-financial institutions) and for those messages not yet live. MT n98 is proprietary message.


Q9. List some common category n messages.

MT	MT Name	Purpose
n90	Advice of Charges, Interest and Other Adjustments	Advises an account owner of charges, interest or other adjustments to its account
n91	Request for Payment of Charges, Interest and Other Expenses	Requests payment of charges, interest or other expenses
n92	Request for Cancellation	Requests the Receiver to consider cancellation of the message identified in the request
n95	Queries	Requests information relating to a previous message or amendment to a previous message
n96	Answers	Responds to an MT n95 Queries or MT n92 Request for Cancellation or other messages where no specific message type has been provided for the response
n98	Proprietary Message	Contains formats defined and agreed to between users and for those messages not yet live
n99	Free Format Message	Contains information for which no other message type has been defined

Q10. What are the commonly used messages of Category 2?

MT	MT Name	Purpose
200	Financial Institution Transfer for its Own Account	Requests the movement of the Sender’s funds to its account at another financial institution
201	Multiple Financial Institution Transfer for its Own Account	Multiple of the MT 200
202	General Financial Institution Transfer	Requests the movement of funds between financial institutions
203	Multiple General Financial Institution Transfer	Multiple of the MT 202
204	Financial Markets Direct Debit Message	Claims funds from SWIFT member banks
210	Notice to Receive	Notifies the Receiver that it will receive funds for the Sender’s account

Q11. What are the commonly used messages of Category 1 ?

Category 1 – Customer Payments &Cheques MT	MT Name	Purpose
101	Request for Transfer	Requests to debit a customer’s account held at another institution
102 / 102+	Multiple Customer Credit Transfer	Conveys multiple payment instructions between financial institutions
103 / 103+ / 103 REMIT	Single Customer Credit Transfer	Instructs a funds transfer
110	Advice of Cheque(s)	Advises or confirms the issuance of a cheque to the drawee bank
111	Request for Stop Payment of a Cheque	Requests the drawee bank to stop payment of a cheque
112	Status of a Request for Stop Payment of a Cheque	Indicates action(s) taken in attempting to stop payment of a cheque

 

Q12. What are the different categories of SWIFT messages?

Following are the SWIFT message Categories:
Category 1: -Customer to customer payments and cheque.
Category 2: Bank to Bank Payments
Category 3: Treasury Markets – Foreign Exchange, Money Markets & Derivatives
Category 4: Collection & Cash Letters
Category 5: Securities Markets
Category 6: Treasury Markets – Precious Metals
Category 6:  Treasury Markets – Syndications
Category 7: Documentary Credits & Guarantees
Category 8: Travellers Cheque
Category 9: Cash Management & Customer Status. This category can also handle propriety messages.