Inside of SWIFT BICs
SWIFT is a vast messaging network used by banks and other financial institutions to quickly, accurately and securely send and receive information such as money transfer instructions and trade related transactions.
Every day, nearly 10,000 SWIFT member institutions send approximately 23.2 million messages on the network.
People who deals with foreign remittance mostly confusing mess of acronyms used in trade. In this article, I explore about SWIFT BIC Code.
The SWIFT BIC is a Business Entity Identifier (BEI) defined by the ISO 9362 standard.
BIC stands for Business Identifier Code and is a worldwide ISO 9362 defined standard to identify financial and non-financial organizations. Further SWIFT-BIC, BIC code, SWIFT ID or SWIFT code are interchangeable.
The registrations of Swift Codes are handled by Society for Worldwide Inter bank Financial Telecommunication (“SWIFT”) and their headquarters is located in La Hulpe, Belgium. SWIFT is the registered trademarks of S.W.I.F.T. SCRL with a registered address at Avenue Adèle 1, B-1310 La Hulpe, Belgium.
SWIFT used to route the financial messages from the issuing institution to the receiving institutions. The SWIFT BIC Code therefore plays a crucial role in payment messaging. Without it, a message cannot be transported to the receiving entity over SWIFTNet. SWIFTNet is a global network that interconnects financial institutions all over the world. The BIC code contains the identity and the location of the participants that are used to find out and reach the message destination.
The Structure of The SWIFT BIC Code
The SWIFT BIC code is composed of exactly 8 or 11 alphanumeric characters structured as followed:
- 4 alphabetical characters that indicate the identification of the institution (bank or corporate)
- 2 alphabetical characters for the ISO3166 code of the country in which the institution is located
- 2 alphabetic or numeric characters used to locate the institution (Particular region or province)
When the second character takes the value “0”, it is typically a test BIC used in test systems as opposed to a BIC used on the live network (also production).
When the second character takes the value “1”, it denotes a passive participant in the SWIFT network. Passive participants cannot be contacted directly over the SWIFT Network. Not Connected BIC means institution not connected to the SWIFT network has the location code ending in ‘1’. These BICs are sometimes referred to as ‘BIC1’, ‘non-SWIFT BIC’ and ‘non-connected BIC’. A non-connected BIC is not allowed in the header of a SWIFT message, otherwise the message is rejected by the SWIFT system.
When second character takes the value “2”, it indicates a reverse billing BIC, where the recipient pays for the message as opposed to the more usual mode where the sender pays for the message.
- 3 alphabetical or numeric characters to indicate a branch or agency of the institution. Unlike the first 8 characters, these last 3 are not mandatory. They are mainly used by banks with many branches.
Examples of SWIFT BIC to illustrate the above explanations:
- NTBCLKLX is the BIC of Nations Trust Bank (NTBC) / in Sri Lanka (LK) / banks location code (LX)
- NTBCLKLXXXX — the last XXX’ is the bank’s branch code. Because the bank clears its transactions from a central location in Colombo, the letters XXX mean centralised clearing. But this is not mandatory.
- UNCRITMM is the BIC of UniCredit Banca (UNCR) / in Italy (IT) / Main office of Milan (MM)
Through below link, SWIFT codes of all the banks and corporate in Sri Lanka can be view: https://www.theswiftcodes.com/sri-lanka/
When dealing with international transactions, supplier or buyer will offer SWIFT code of their bank. To find out that bank details, Free BIC search on swift.com can be done. All searches must include a BIC code only. Banks or financials institutes have SWIFTRef Directories to trace the banks.
In simple terms SWIFT is the global provider of secure financial messaging services. Gaining knowledge in SWIFT will lead to smooth handling of foreign remittances.
