The introduction and analysis of SWIFT cover and serial payments in a previous article provided us with a good foundation to move further. We can now consider concrete examples of SWIFT MT103 202 cover payments, see which parties are involved and the content of the messages that they exchange.
In this article, we will perform a detailed analysis of a MT103 announcement sent by the debtor bank to the creditor bank. Let’s first look at the picture depicting the messages and the different parties.
On the picture, Input and output messages are highlighted to make you aware that the message sent, is not exactly the same received by the receiver. The output messages that SWIFT sends to the receiver, have slightly different formats (See block 1 and block 2 definitions) than input messages.
What you see on the picture is a payment that a company in France, customer of BNP Paribas in Paris, wants to send to another company in Spain, customer of Banco Santander in Madrid. The payment is in USD currency. Since BNP Paribas and Santander are not located in the USD currency zones, the funds transfer happens through their correspondent accounts opened with Banks in the USA. In this example, we assume that the correspondent of BNP Paribas is Wells Fargo and the correspondent of Santander is Bank of New York Mellon. In any case, BNP Paribas sends a combination of SWIFT MT103 202 Cover messages for the transfer.
[box type=”info” size=”large” style=”rounded”]Major Banks in general create subsidiaries in other currency zones that they use as correspondents. Santander for instance would use Santander New York instead of Bank of New York as correspondent.[/box]
The table below contains the fields that are transported in the MT103 announcement message. An additional column (comments) provides further explanation, so that it is easy to understand each field and what it is used for.
Read this page on the SWIFT formatting rules and Character sets of MT Messages to get additional information and understand what 16x, 4!c and the format of the field options mean.
The first message in the combination (of SWIFT MT103 202 Cover) that is analyzed in detail below is the MT103 announcement.
Narratives and notes on this SWIFT MT103 announcement message
As usual, there is a lot to say about this SWIFT MT103 announcement message. The following narratives and notes allow to get a deeper understanding of the message content.
Narrative and note 1 (Main purpose of this SWIFT MT103 announcement)
The Sender (BNPAFRPP) is informing / announcing to the Receiver (BSCHESMM) that funds are coming for a specific customer. The funds will be credited on receiver’s USD account with its correspondent IRVTUS3N.
Narrative and note 2 (Presence of fields 53a and 54a in this SWIFT MT103 announcement)
The presence of the Tags 53A and 54A indicate that there is no account relationship in USD, the currency of the transaction, between sender and receiver.
Field 53A indicates the Bank which is to provide the funds to the Receiver on behalf of the Sender.
Field 54A is the receiver’s correspondent, the Bank that will receive the funds on behalf of the Receiver.
Sender’s correspondent bank does not have account relationship in USD with the Receiver (BSCHESMM), therefore, Receiver’s correspondent bank must be added to the chain (54A:IRVTUS3N).
Narrative and note 3 (Absence of fields 52a and 57a in this SWIFT MT103 Announcement)
There is no ordering institution (52A) in the message. So the ordering customer is customer of the Sender.
There is no account with institution (57A). It means that the Beneficiary customer account (:59:/ES6300491800132710387658) is hold by the receiver.
Narrative and note 4 (The charges)
Details of charges (Tag 71A) is SHA. The charges are shared between Ordering and beneficiary customer. Sender pays charges to ordering bank. Beneficiary pays charges to receiving and other intermediary banks.
This ends our analysis of the MT103 Announcement. We made an important step. But that is just one message in the combination of SWIFT MT103 202 Cover. You certainly want to look at and analyze the MT202 COV message as well. That will be the subject of the next article.