4 Wire Transfers: Originator to Its Bank to Receiving Bank. This chapter and the next discuss the links in the fundstransfer chain and highlight the many risk management opportunities. This chapter discusses a bank’s right to decline to accept a customer’s payment orders | 4 Wire Transfers Originator to Its Bank to Receiving Bank This chapter and the next discuss the links in the fundstransfer chain and highlight the many risk management opportunities. This chapter discusses a bank s right to decline to accept a customer s payment orders requirements that a customer report fraudulent or erroneous transfers within specified periods following receipt of the bank statement the liability of the bank and the customer for losses resulting from fraudulent payment orders and interest that may be due to the customer from the bank. The discussion includes the bank s perspectives on the credit risks of the wire transfer payment system. LINKS IN THE FUNDS-TRANSFER CHAIN A wire transfer transaction is typically a series of instructions called payment orders. The sender of the first payment order is the originator and the first payment order is from the originator to the originator s bank. The ultimate recipient of the 59 Wire Transfers funds transfer is the beneficiary and the last payment order is from the originator s bank or an intermediary bank to the beneficiary s bank. The series of payment orders may be viewed as a funds-transfer chain and each payment order as a link in the funds-transfer chain. Thus for example if ABC Inc. wishes to send a wire transfer of 10 000 to XYZ Corp. ABC Inc. may originate the transfer by sending instructions to its bank Bank A to transfer 10 000 to XYZ Corp. s account at Bank B. Bank A may execute ABC Inc. s order by sending its own payment order to the Federal Reserve Bank in the region instructing the Federal Reserve Bank to send funds to XYZ Corp. s account at Bank C. The Federal Reserve Bank may then debit the account of Bank A for 10 000 and credit the account of Bank C for 10 000 and send instructions to Bank B that it has credited its account for the benefit of XYZ Corp. In this example ABC Inc. is the originator Bank A is the originator s bank the Federal Reserve Bank is an intermediary bank Bank B is .
