So I have a question (hopefully someone experienced will answer). Am I crazy to believe that you can place a forward value date on an MT103 field 32 for up to 4 days for transactions over 50k Euro? There is a lot of nonsense that I have seen thrown back and forth regarding the "conditionality" of the MT103 but from what I have read (via Swift), it is possible to 1) place a date in the future to credit an account, and 2) disable a payment (via MT103), utilizing an MT196.
The floor is open for discussion on this one but I would really appreciate a firm answer.
Scope of the Service Level Agreements
Posted 29 December 2003
The “Service Level Master Agreement” (SLMA) sets out the overall common legal framework for each of the Service Levels. SWIFT users wishing to sign up for one or more of the Service Levels first need to sign the “Service Level Master Agreement” (SLMA) and will select the relevant Service Level(s) by completing and returning the Service Level Selection Form.
The set of Service Levels has been developed by SWIFT and its user community. These set out specific rules and regulations applicable to the participating institutions for each Service Level:
Service Levels Flag Short description
Request for Transfer N/A Supports a growing need for centralised cash management services and for remote disbursements
SWIFTPay Field 23B: MT 103(+)
Field 23: MT 102(+)
Covers the lower value, less urgent Credit Transfers markets
Priority Field 23B: MT 103(+) Guarantees same day value and notification to the Beneficiary Customer of incoming Credit Transfers within four hours
Standard Field 23B: MT 103(+) Covers Credit Transfers with an end-to-end execution time of between two and four business days
Direct Debit Transfer Request N/A Enables banks to operate in a predictable environment
The combination of the Service Level Master Agreement and the Service Levels eliminates the need for multiple, detailed, bilateral bank agreements. Participating institutions then only have to agree on the interbank fees that apply to the transactions.
Guarantees:
The Service Levels enable participating SWIFT users to provide guarantees to their end-customers, in particular, with respect to the execution time, remittance information and charging arrangements.
All Service Levels define specific acceptance, control, rejection and redress procedures as appropriate.
Credit Transfers Service Levels
Main differences between the different Credit Transfer SLAs
SWIFTPay Standard Priority
Message Type MT 103 (+) / MT 102 (+) MT 103 (+) MT 103 (+)
Standard amount USD 20,000
EUR 50,000 (EU Cties) Unlimited Unlimited
Currencies Original or Beneficiary Cty (USD or EUR) Any convertible Any convertible
Max E2E Execution Time Days 6 business days 2-4 business days 1 business day
Remittance Info. "On Us" N/A N/A 4 hours
Remittance Info. "Not On Us" From 18 characters up to 4 *35x From 18 characters up to 4 *35x From 18 characters up to 4 *35x
Batch Payments Suitability Yes No No
Request for Transfer Service Level
The “Request for Transfer” Service Level defines the responsibilities of the participating institutions sending Request for Transfer instructions (Forwarding Banks), as well as the responsibilities of the participating institutions receiving the instructions (Executing Banks). This Service Level also provides additional MT 101 message specifications that ensure a uniform interpretation and implementation between participating institutions.
Direct Debit Service Level
The “Direct Debit Transfer Request” Service Level defines the obligations of the Creditor’s Bank and Collecting Bank. This Service Level also provides additional MT 104 message specifications that ensure a uniform interpretation and implementation between participating institutions.
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I don't understand why you dabble in something that is not for you, but never mind:
You can delay the credit of any amount of a SWIFT payment by putting the right message in there. However what you are talking about is the Service Agreement between the users of SWIFT and SWIFT, this does allow them to rely on minimum standards in order to guarantee to their customers a reliable level, because SWIFT relaying the message and all partners of SWIFT agreeing to be bound by it. This does not affect the bank-customer relationship, which is local. In some jurisdictions as long as the settlement of an instruction has not resulted in the money actually be made available to the receiving bank, the funds need to be booked in the bank customers account, others allow the money to be debited and then transferred within a defined number of business days.
Your proposed MT103 is nothing new. For example if I have a Letter of credit out and the papers have a small variation I need to reconfirm with the customer, I send out a message for document discrepancy but I can with the message identifying put out a delayed settlement wire via MT103 by exteding the settlement time under the Service Agreement, while I go back to my client and ask him if the minor document discrepancy is okay. Or other example, a check comes in by SWIFT, looks okay but since it goes cross border and the amount is not within a pattern, I put a forward settlement date in and contact my customer. When he denies the check I send a cancellation order with details, which allows the receiving bank to act. It cuts of an injunction in the check-judgment procedure and is a legal tool helping my customer to block a fast judgment.
The point is that these MT103 delayed settlements are not conditional, they are done wires, just because the timing aspect the sending bank can cancel the wire. A conditional wire would be the case when the receiving bank would only credit in the customer bank account when all the conditions are being met, meaning the receiving bank has trust obligations, which in order to have them as a basis of the wire need to be agreed. Such agreement is not part of the Service Level Agreement, it can be agreed in the Nostro Relation but always needs reference and agreement. Since a Trust Arrangement means the risk being in the receiving bank they need to be accepted. Whereas a delayed settlement MT103 the risk is only at the sending bank, and it their duty to reverse the wire before settlement. For that reason the booking reference number is usually withheld.
This is a kind of replacement for a pre-advise, at least part of the pre-advise function, not all of it.
Let me tell you that most banks apply the procedure to close down non-institutional accounts if such request is made by the client.
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sorry if I mislabeled you, generally I tend to say someone is dabbling when he is not in the position to actual handle or give direct instruction on the SWIFT handling, because frankly this is a special field which even most lawyers make a big turn around. Reading all there is will not help for the details and if you do not have the agreements of the bank you wish to use on your desk it will not help much.
I put all the different details in rules and regulations in the professional forum for those interested.
Good luck
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