Wire transfers are an efficient and easy means of sending money worldwide. People usually opt for them when they want to move huge amounts of money from one bank account to another.
However, mistakes do occur, and one might accidentally send funds to the wrong account. So, what happens when you mistakenly wire money to the wrong person? Can a wire transfer be reversed?
How Does a Wire Transfer Work
Financial institutions worldwide use SWIFT codes to communicate with one another and make wire transfers. Some European countries do not use SWIFT codes but use IBAN codes instead.
You can send a very small or substantial amount of money through wire transfers, and you can do this as an individual or an organization.
The duration of transfer varies based on the type. Domestic transfers take less than three days, and if the transfer is between the same bank, it could take less than 24 hours. You might experience delays due to bank errors or public holidays.
International wire transfers take longer and vary between money transfer providers. You can always reach out to your bank to confirm how long the wire would take.
Can You Reverse a Wire Transfer?
Sadly, there is little you can do to have a wire transfer returned to you. This is because both banks (remitting and receiving) did what they were supposed to and have no access to the funds.
That said, there are certain conditions where your bank might reverse your money. Here are some of those situations:
- If the error is from the bank’s end and they sent the money to the wrong recipient
- The bank did the wire transfer twice
- The bank sent more than you requested
As you can see, these are all scenarios in which the bank made a mistake. If you made a mistake, it might be hard to return a wire transfer. Luckily, it is not impossible.
How to Reverse Wire Transfers
There are cases where you might be able to get your funds back. Here are some of these scenarios.
Wrong Account Name on Recipient Bank
When the account name does not tally with the account number and code, the receiving financial institution might reject the funds before they deposit them in the recipient’s account.
However, keep in mind that confirming if the account name and number match is not a legal requirement, and the transaction may still go through.
Bank Customer Service
You can contact your bank if you accidentally made a wire transfer to the wrong account. They may help you reach out to the beneficiary’s bank and alert them about the error.
However, the result of this endeavor relies entirely on how helpful your bank is and the quality of its customer service. After all, you made the error, so your bank’s choice to help is at their discretion.
If all goes well and your bank reaches out to the beneficiary bank, it is up to that bank to request that the recipient accepts to be debited.
This all depends on the integrity of the unknown recipient. They would have to admit that they are unaware of the source of the funds and agree to have it returned.
Fraud Wire Transfer
In the case of fraud, the recipient’s bank is allowed to remove the funds from the account. Nevertheless, they can only remove what is available in the account.
If the money has been removed or transferred somewhere else, there is little the receiving bank can do.
Personal Lawsuit
If you desperately need the money and can’t let it go, you can file a personal lawsuit. You can do this with the help of an attorney. The attorney should be able to take you through the process and inform you of the possibility of getting your money back.
Can You Cancel a Wire Transfer?
That said, this all depends on your currencies and the payment networks. For example, a GBPEUR transfer usually happens very quickly.
SWIFT transfers take a long time to process, and this is probably one of the best times to reverse an international wire transfer.
SWIFT stands for the Society for Worldwide Interbank Financial Telecommunication, and this body allows the originating bank to send a SWIFT message to the receiving bank.
The notification would inform the receiving bank of the payment error and request that they return the funds to the sender’s account. The bank can reverse the wire transfer if the money has not reached the recipient’s account.
Remember that if you use intermediary banks, they may take a small fee from the outing and reversed wire. This fee should not cost more than $20 per transaction.
How to Prevent Bank Wire Transfer Mistakes
Human errors occur, and mixing numbers and information is easy. Regardless, you can always take extra measures to avoid these mistakes.
Hence, you should double-check all information you input as much as possible. By cross-checking all the information you include, you can minimize the risk of sending funds to the wrong account.
If you are conducting a business transaction, signing a wire transfer agreement might be worthwhile to protect your money.
Conclusion
Making a mistake while running a wire transfer can be frustrating. If your bank caused the wire transfer error, then they would take action to reverse it. On the other hand, if the error was your fault, it is hard to reverse the funds. Even with the help of the bank, reversing the funds can be challenging, but it is worth a try.
Paul Martinez is the founder of EcomSidekick.com. He is an expert in the areas of finance, real estate, eCommerce, traffic and conversion.
Join him on EcomSidekick.com to learn how to improve your financial life and excel in these areas. Before starting this media site, Paul built from scratch and managed two multi-million dollar companies. One in the real estate sector and one in the eCommerce sector.