Once an international bank license is approved, one of the first tasks is to apply for a SWIFT code. In this article, I will define the Swift code for an international bank, review the requirements, and I’ll tell you how to apply for a Swift code for an offshore bank.
For review, the first ten major tasks to launch an offshore bank are:
1. Apply for and secure a Permit to Organize,
2. Build out your office,
3. Hire your employees, including a qualified compliance officer,
4. Set up your core banking system,
5. Negotiate a correspondent account and/or FedWire account,
6. Draft your compliance documents, manuals, and other in-house training materials,
7. Write your website and marketing materials (all of which must be approved),
8. Apply for and receive your Swift code,
9. Negotiate and secure a Permit to Operate, and
10. Take the business live and begin onboarding clients.
A Swift code for an international bank is 8 or 10 characters long. It’s a unique identifier for your bank used in wire transfers and other transactions involving banks, financial institutions, and non-financial members of Swift.
Swift code stands for Society for Worldwide Interbank Financial Telecommunication code.
These codes are also referred to as a BIC, or Bank Identifier Codes. Swift and BIC are globally-recognized identification codes for banks.
BIC/SWIFT codes are composed as follows:
AAAA BB CC DDD
AAAA: 4 character bank code
BB: 2 character country code
CC: 2 character location code
DDD: optional 3 character branch code
When there is no branch or location code, the end of the Swift code is written as XX XXX or left blank. The branch code can be letters or numbers.
For example, the Swift code for Euro Pacific International Bank, and International Financial Entity or offshore bank based in Puerto Rico is as follows: EUPNPRSJ
Where EUPN represents the name of the bank, PR represents the country code of Puerto Rico and SJ is the city, San Juan. This bank has only one branch, so the last three characters are left off.
There are over 11,000 institutions connected to Swift in over 200 countries. Swift is the backbone of international banking and is the method for identifying an international bank. The network has sent 6.5+ billion and counting messages and has 100% uptime.
If your offshore bank does not have a Swift code, you’ll get a lot of questions from customers as to why. Thus, it can be said that Swift membership is mandatory from a marketing and image standpoint. It is possible to operate using your correspondent’s Swift, but that looks unprofessional.
Swift includes banks, non-bank financial institutions, such as brokerages, and large corporations sending transfers. Offshore banks qualify for membership as supervised financial institutions under Rule 202. A supervised financial institution is defined as:
An entity that engages in payment, securities, banking, financial, insurance, or investment services or activities. A bank must be licensed by a financial market regulator and subject to supervision by that financial market regulator.
Your offshore bank can connect to Swift using several connections and protocols. In most cases, a small bank will connect over the internet or into Swift’s cloud-based system, Lite2. There are also shared connections and 3rd party systems. Larger institutions will connect using a direct leased line similar to point to point leased line for internet connectivity.
To apply for Swift membership as a licensed financial institution, download the guide and application package called Join Swift. Note that you must have your banking license or permit to operate before you apply for a Swift code. A permit to organize is not sufficient.