Wire Transfer
Also written Wire transfers · Cross-border wire transfer
Any transaction carried out for an originator through a financial institution by electronic means to make funds available to a beneficiary at a beneficiary institution — even if originator and beneficiary are the same.
In plain language
A wire transfer moves money electronically from one institution to another. For AML purposes the money is the easy part; the hard part is the information that travels with it.
If the payment message says who sent the money and who is receiving it, every institution in the chain can screen it and an investigator can follow it later. If that information is thin, missing or stripped out, the transfer becomes untraceable in exactly the way launderers want.
So the IFSCA Guidelines regulate wire transfers mainly as a data obligation: identify the originator, put prescribed details into the message — more of them above USD 1,000 — keep that data intact through the chain, and screen every party against sanctions.
How it works
Definition (Chapter 5, section 5.6.2). Any transaction carried out on behalf of a wire transfer originator through a financial institution by electronic means with a view to making funds available to a beneficiary at a beneficiary institution, irrespective of whether the originator and the beneficiary are the same person.
Scope. Applies when a bank or regulated entity sends or receives funds by wire (including serial and cover payments) for an originator or beneficiary — not to transfers and settlements between a bank and another financial institution acting on their own behalf. All financial institutions shall transact and receive all monetary consideration only through an account with a Banking Unit in the IFSC.
Controls on every transfer.
- Monitor messages to and from high-risk countries, and suspend or reject those with sanctioned parties or jurisdictions
- Where name screening confirms a terrorist or terrorist entity, block, reject or freeze immediately
- Escalate positive hits to the Principal Officer; document the approve/reject decision at an appropriate level
- Never omit, delete or alter payment message information to avoid detection by another institution
- Before effecting a transfer, the ordering bank identifies and verifies the originator and records details permitting reconstruction — date, type and amount of currency, value date
Information in a cross-border transfer.
| Amount | Must accompany the transfer |
|---|---|
| Below or equal to USD 1,000 | Originator's name; originator's account number (or unique transaction reference); beneficiary's name; beneficiary's account number (or reference) |
| Exceeds USD 1,000 | All of the above and any one of: originator's residential address; registered or business address (and principal place of business if different); unique identification number; date and place of birth, incorporation or registration |
Batch files. Bundled cross-border transfers from one originator must carry verified originator and beneficiary information fully traceable within the beneficiary country.
Intermediary institutions retain all accompanying information; where technical limits prevent it staying with a related domestic transfer, the receiving intermediary keeps a record for at least six years, and must have risk-based policies on when to execute, reject or suspend transfers lacking information.
The Indian reporting layer. Separately, Rule 3(1)(E) of the PML Rules records all cross-border wire transfers of more than Rs 5 lakh or equivalent where either origin or destination is in India.
A worked example
Illustrative amounts.
Sabarmati Bank (IFSC Banking Unit) sends three cross-border transfers for customers on 9 July.
| Transfer | Amount | Information required |
|---|---|---|
| A. Ms Mehta to her daughter's university account in Canada | USD 950 | Four items: both names, both account numbers |
| B. Deccan Freight Ltd to a supplier in Singapore | USD 48,000 | The four items plus one of: registered address, incorporation number, or date and place of incorporation — the bank includes the incorporation number |
| C. Mr Qureshi to his own account in London | USD 12,500 | Still a wire transfer: originator and beneficiary being the same person does not change the definition; four items plus one additional identifier |
The screening hit. Transfer B's beneficiary name returns a partial match to a name on the UNSC list. The hit is escalated to the Principal Officer, who reviews the Singapore supplier's registration details, concludes it is a false positive, and documents the decision to release.
The request the bank refuses. Deccan Freight's finance manager asks the bank to leave the supplier's name out of the message "to avoid delays at the correspondent". Omitting information to avoid detection by another institution is prohibited.
Why NISM asks about it
Chapter 5 (IFSCA AML, CFT and KYC Guidelines), sections 5.6.2 and 5.6.3, carry the definition, the screening rules, the USD 1,000 information tiers, batch files and intermediary institutions; Chapter 3 carries Rule 3(1)(E); Chapter 8 carries Special Recommendation VII on wire transfers. Expect the definition (especially "irrespective of whether the originator and the beneficiary are the same person"), the USD 1,000 threshold and what must accompany each tier.
Common exam traps
- Same originator and beneficiary is still a wire transfer.
- Above USD 1,000 you add any one of address, unique identification number, or date and place of birth, incorporation or registration — not all of them.
- The workbook is inconsistent about exactly USD 1,000. It first puts transfers below or equal to USD 1,000 in the basic tier and applies the additional information where the amount exceeds USD 1,000 — and then adds that where the amount is equal to USD 1,000 the bank "shall also comply with these requirements". Learn the tiers as ≤ USD 1,000 basic and > USD 1,000 enhanced, and be aware that the text also asks for the enhanced information at exactly USD 1,000.
- Bank-to-bank settlements on their own behalf are outside the clause.
- A confirmed terrorist match means block, reject or freeze immediately — not escalate and wait.
- Six years is the intermediary institution's minimum retention where information cannot travel with the domestic leg.
- Rs 5 lakh (Rule 3) and USD 1,000 (IFSCA) are different thresholds for different purposes.
Check yourself
1.For a cross-border wire transfer exceeding USD 1000, what must the ordering institution include beyond the originator and beneficiary names and account numbers?
- a)Nothing further is required
- b)Any one of: the originator's residential address; registered or business address and principal place of business; unique identification number; or date and place of birth, incorporation or registration
- c)All four of those items
- d)The beneficiary's tax residency certificate
Show the answer
Answer: (b) Any one of: the originator's residential address; registered or business address and principal place of business; unique identification number; or date and place of birth, incorporation or registration
If the amount to be transferred exceeds USD 1000, every bank which is an ordering institution shall include in the message or payment instruction that accompanies or relates to the wire transfer, the information required as above, and any of the following: i. the wire transfer originator's residential address; ii. registered or business address, and if different, principal place of business, as the case may be; iii. the wire transfer originator's unique identification number (such as an identity card number, birth certificate number or passport number, or where the wire transfer originator is not a natural person, the incorporation number or business registration number); or iv. the date and place of birth, incorporation or registration of the wire transfer originator (as applicable).
"Any of the following" — one item, not all four, which disposes of option C.
What "the information required as above" means is the basic set for transfers below or equal to USD 1000: the name of the wire transfer originator; the wire transfer originator's account number (or unique transaction reference number where no account number exists), the name of the wire transfer beneficiary, and the wire transfer beneficiary's account number.
So option A is wrong — the whole point of the threshold is that more is required above it.
Option D invents a document. All four extra items concern the originator, not the beneficiary.
And the boundary case is settled expressly: in a cross-border wire transfer where the amount to be transferred is equal to USD 1000, every bank which is an ordering institution shall also comply with these requirements.
Before any transfer: every bank that is an ordering institution shall identify the wire transfer originator and verify his or its identity; and record adequate details of the wire transfer so as to permit its reconstruction, including but not limited to, the date of the wire transfer, the type and amount of currency transferred and the value date.
And information may never be stripped: a Regulated Entity shall not omit, delete or alter information in payment messages, for the purpose of avoiding detection of that information by another Regulated Entity in the payment process.
2.For how long must a Regulated Entity preserve records under the IFSCA (AML, CFT and KYC) Guidelines?
- a)At least six years from the date on which the business relationship has ended or the transaction is completed
- b)Three years from account opening
- c)Five years from the date of the transaction only
- d)Until the next inspection by the Authority
Show the answer
Answer: (a) At least six years from the date on which the business relationship has ended or the transaction is completed
The Regulated Entity shall preserve all necessary records, for at least six years or for such period as prescribed under the applicable laws, from the date on which business relationship has ended or transaction is completed.
Six years — longer than the PMLA's five, so the IFSC standard is the stricter one. Section 12 of the Act requires five years from the date of transaction for transaction records and five years after the business relationship... has ended or the account has been closed, whichever is later for identity records, which makes option C the natural trap.
Where the end date is uncertain: where the date on which the business relationship with a customer has ended remains unclear, it may be taken to have ended on the date of the completion of the last transaction.
What must be kept: a copy of all documents and information obtained in undertaking initial and ongoing Customer Due Diligence; records of customer business relationships (both original and certified copies) including correspondence, adequate records of transactions to enable standalone transactions to be reconstructed, and internal findings and analysis... whether or not it results in a Suspicious Transactions Report; the internal notifications; Suspicious Transactions Reports and any relevant supporting documents; and any relevant communications, if made with the FIU.
Note that last phrase in the analysis limb — the reasoning is kept even where the decision was not to report.
Option D misunderstands the purpose. Records are not kept until inspected but for a fixed period, and the Regulated Entity shall provide to the Authority or any law enforcement agency immediately on request, a copy of a records maintained by it.
Electronic storage is permitted where records are readily accessible and promptly made available.
And six years appears again for intermediary institutions in wire transfers — where technical limitations intervene, a record shall be preserved by the receiving intermediary institution for at least six years.
3.A screening check shows an account resembling a name on a UNSC sanctions list. What must the Regulated Entity do?
- a)Nothing, unless the match is exact
- b)Report the details to FIU-IND and also advise the Ministry of Home Affairs, under the UAPA Order dated February 2, 2021
- c)Report only to IFSCA
- d)Close the account without reporting
Show the answer
Answer: (b) Report the details to FIU-IND and also advise the Ministry of Home Affairs, under the UAPA Order dated February 2, 2021
Details of accounts resembling any of the individuals/entities mentioned in the above lists, shall be reported to FIU-IND apart from advising Ministry of Home Affairs as required under UAPA Order bearing file no.14014/01/2019/CFT dated February 2, 2021, issued by the CTCR Division of the Ministry of Home Affairs, Government of India.
Two recipients — FIU-IND and the Ministry of Home Affairs.
And note the word "resembling", which disposes of option A. A near match is reportable; the entity is not required to establish identity before acting.
The underlying duty: the Regulated Entities shall ensure that in terms of Section 51A of the Unlawful Activities (Prevention) Act, 1967 (UAPA) and amendments thereto, they do not have any account in the name of individuals/entities appearing in the lists of individuals and entities, suspected of having terrorist links, which are approved by and periodically circulated by the United Nations Security Council (UNSC).
The two lists: the "ISIL (Da'esh) & Al-Qaida Sanctions List", and the "1988 Sanctions List", consisting of individuals (Section A of the consolidated list) and entities (Section B) associated with the Taliban.
Option D is wrong on both limbs — reporting is required, and closing an account unilaterally is not the prescribed response. Section 51A empowers the Central Government to freeze, seize or attach funds and other financial assets or economic resources, and in wire transfers the Guidelines require that where screening confirms that the wire transfer originator or wire transfer beneficiary is a terrorist or a terrorist entity, the Regulated Entity shall block, reject or freeze assets of these terrorists or terrorist entities immediately.
Positive hits are escalated internally too: where there are positive hits arising from name screening checks, they should be escalated to the Principal Officer. The decision to approve or reject the receipt or release of the wire transfer should be made at an appropriate level and be documented.
And other resolutions must be watched: other UNSC Resolutions circulated by the IFSCA in respect of any other jurisdictions/entities from time to time, shall also be taken note of.
Where this is taught
Free preparation for NISM Series IFSCA-01Related terms
- Correspondent bankingAn arrangement in which one bank, the correspondent, provides services such as wire transfers, currency exchange and trade finance to another, the respondent, in a market where the respondent has no presence.
- Domestic Wire TransferUnder the IFSCA Guidelines, a wire transfer in which both the ordering and beneficiary institutions are in the IFSC, including any chain of transfers taking place entirely within the IFSC.
- FATF StandardsThe FATF Recommendations together with their Interpretive Notes and the applicable Glossary definitions — the international AML/CFT/PF standard that more than 200 jurisdictions have committed to implement.
- International Financial CentreA financial centre that serves customers outside its own jurisdiction — in India, GIFT IFSC, where the AML rules are written for a cross-border, cashless, foreign-currency business.
- UNSC sanctions listsThe UN Security Council's ISIL (Da'esh) & Al-Qaida Sanctions List and 1988 Sanctions List — no IFSC regulated entity may hold an account in a listed name, and resembling accounts go to FIU-IND and MHA.
- Offence of cross border implicationsUnder section 2(1)(ra) of the PMLA, conduct abroad that would be a scheduled offence in India with proceeds reaching India, or a scheduled offence in India whose proceeds are sent or attempted to be sent abroad.
- Trade-based money launderingDisguising the proceeds of crime and moving value through trade transactions to legitimise their illicit origin — by misrepresenting the price, quantity or quality of imports or exports.