A wire transfer is a way to directly deposit funds into the account of another individual or business. Typically, wire transfers occur when large sums of money are being exchanged. This can occur between any two accounts within the United States. There are both procedural and legal guidelines to wire transfers. Ensure you are following both, to not only deliver the funds correctly, but also avoid any financial or legal penalties.

Initiating the Transfer

You will need basic information to initiate a transfer. This includes:

  • The name of the person or institution on the account where the money will be received
  • The American Banking Association (ABA) routing number, name and phone number for the bank
  • The account number where the funds will be deposited

With this information, you can initiate a transfer by phone or the Internet. If the transfer is very large, you may need to appear in person. This is a fraud protection put in place for you; it is designed to stop another individual from wiring money out of your account without permission. Each bank will have specific regulations regarding when a transfer must occur in-person, so check the rules with your bank.

Asking for a Transfer Confirmation

Once you initiate a transfer, it will post fairly rapidly. The timing on the transfer depends on when the wire is initiated. For example, wires initiated after 2PM on the West Coast will not post in a bank on the East Coast until the next day. As a result, it is important to ask for a wire confirmation from the bank. This will guarantee you sent the wire when you told the recipient you did. For a large wire, it may be beneficial for the recipient to notify his or her bank of the transaction. This will prevent any red flags from stopping the transfer on their end.

Setting Up Escrow

For a large purchase initiated through wire transfer, you may consider setting up an escrow account instead. This is a particularly wise idea if you do not know the recipient well. For example, if you are purchasing an antique car off the Internet from an individual seller, you may be concerned about the potential for fraud to occur. With an escrow account, the funds you owe are placed safely with a third party. They are only given to the recipient upon successful delivery of the promised item. The seller will know you have the money and are prepared to pay, and you will be protected from fraud.

The Patriot Act

If you are wiring money outside of the country, you must be aware of regulations put in place due to the Patriot Act. These regulations are designed to stop funds from reaching the hands of terrorists or other enemies of the United States. Unfortunately, the regulations can stop even harmless funds from being transferred in and out of the country. The government will want to track the exchange and understand the nature of the exchange. As a result, the process may take much longer. Violating the Patriot Act, even if you are not committing a crime, can result in legal penalties.

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