offshorebankwire.com

When foreign or offshore banks are involved, or sending an offshore bank wire through the fedwire system, money is credited to the foreign bank’s account in it’s U.S. correspondent bank before being sent on to the overseas bank itself.

An example, taken in part from fraudaid.com goes a little bit like this:

A money transfer from Miami, Florida to an offshore bank in Nassau, Bahamas will first be transferred to, Chase Manhattan in New York first.  This means that the Nassau bank maintains an account at Chase in New York.

1. The funds are debited from the sender’s account in the Miami bank.

2. The Miami bank forwards the funds to its Federal Reserve account with instructions to credit Chase’s Federal Reserve account with the transfer amount.

3. The Federal Reserve notifies Chase of the credit to it’s Fed account.

4. Chase debits it’s Federal Reserve account for the transfer and credits the Bahamian offshore bank’s reserve account at Chase.

5. Chase notifies the Bahamas offshore bank of the credit to its Chase reserve account. 

6. The Nassau offshore bank debits its Chase reserve account and credits the account of the receiving account holder.

FraudAid indicates that this entire process can take a couple of days, depending on the time of day the transfer was initiated, time zone differences, and banking holidays. 

However, once the funds have been credited to the correspondent bank’s account at the Federal Reserve, there is no calling back the transaction.  You will have to apply to the account holder to whom the funds were transferred in the Bahamas in order to have them sent back.

While banks in the United States use SWIFT to make payments to banks outside of the United States, domestic bank-to-bank transfers work a little differently.  In the US they use something called the Fedwire system.

The Fedwire system utilizes the Federal Reserve System and its bank routing numbers.  Bank routing numbers work in a similar way to how Automated Clearing House, or ACH payments, effect the payment and collection of checks.

European banks, on the other hand, making domestic wire transfers, or transfers within the European Union also utilize the International Bank Account Number, or IBAN.