So I’m closing my almost dormant bank account in the USA (with efirstbank) and transferring the balance to my UK account (in GBP). I got the wire details from my bank here, completed a fax as per efirst’s instructions, and sent it to them. This is their reply:-
So I said fine, let’s get it done. I got the check this morning and took it to my UK bank. They deposited it fine, but then said it would take maybe 6 weeks to clear the funds. Why? says I. Because they have to send the check to the branch that issued it, says they.
WTF?
They send a check 4,500 miles across the Atlantic to me and then it gets sent straight back again? What happens next, does efirstbank then wire the funds to my UK bank? I think really my question is why is this process so difficult. In the 21st century internet age surely there’s a system that would work better for everyone?
Partly internation drug and terrorism laws. Partly unfamiliarity. Partly risk and liability.
The cheque reconciliation is a bank-to-bank payment, using standard channels. You aren’t involved in it at all in the bank to bank transfer. At both ends your account is handled by internal processes, in between it’s handled by a generic process.
In contrast, a wire transfer is (a) something the branch doesn’t do often, and (b) requires identification transmitted through the middle, not just at the ends.
When you get your cashiers cheque, you had to identify yourself as authorised. When you deposit the cheque, it goes into an identified accout. If you loose the cheque, it’s your problem – you have to pay to have it cancled, then pay again to have it re-issued, etc etc.
But when it goes by wire, random clerks in the middle have to verify that it is going into the right bank, right account, has the correct identification to satisfy the drug and terrorism requirements, and that they aren’t going to spend hours somewhere down the line trying to sort out the mess. They typically can’t even bill you for failed attempts.
The people in your branch don’t know much more about that than you do, and it may take them 20 minutes on the phone figuring it out, then getting back to you the next day for more information, then another 10 minutes trying it again etc.
At my bank, wires have to be signed in person by the person initiating the wire. To do a wire without you physically there in the branch requires a lot more steps and hoops to complete. A cashier’s check can be cut with fewer steps, once the bank has identified you.
Also, sending a check back to the issuing bank is how ALL checks work. For international ones, the banks are more leery of ‘advancing’ you the funds, since you could take the cash before the check bounces. Efirstbank will confirm the check and then it’s a matter of them debiting the account the check is associated with, and your new bank credited the account you deposited into.
For the most part it’s that US banks seem completely unaware that banks exist in other parts of the world. Some have a hard time realizing that banks exist in other states. I tried a few different ways to transfer funds from the US to the UK. They had no idea what a SWIFT or IBAN number was. Getting a cheque sent was easiest. It doesn’t always have to take 6 weeks. On the form I use to deposit US cheques at Lloyds there is a tick box asking if I want it sent for collection or not. If I say no the funds appear in a couple days.
Doing a wire is a pain in the ass, and takes a couple high-salaried people a fair amount of time to do. It’s also for-keeps and low-recourse. Writing a check and waiting for funds to be collected is really easy for the bank to do. And any errors along the way can be undone in the interim.
“There should be an easier way–” well, there probably is. But these are big organizations, working internationally, through wheel ruts of what-won’t-get-us-in-trouble. The regulations are believed to have teeth. Bank people have appropriately big imaginations about possible liabilities.
Collecting international funds is kind of a bummer. A new and better way to collect them would be an idea, a meeting, a conference, a council check, another go through the regulations tome, policy and procedures for it, training for frontline people and customer training… if this sounds like any other business I haven’t described it well enough.
The problem exists more among certain countries than others. A lot of European countries have just moved to a system where you have to use the IBAN for everything, and so long as the two accounts involved are in this system, they count as “domestic” re. commisions etc (even if the currencies involved are different). My brother works as a combo treasurer/comptroller (international) for a multinational firm and he does e-transfers between, say, Bulgaria and India, about as routinely as I use a DC to pay at the till. But as kferr said, a surprising amount of the people working in American banks don’t even know what an IBAN is. The rest of the world considers electronic transfers of funds routine; the US does not.