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New legislation on international wire transfers

By Act of January 9 2000, published on February 9 2000 and effective as from that date, Belgium implemented European directive no. 97/5/EC of January 27 1997 on international wire transfers.

The new legislation provides for detailed rights and obligations regarding wire transfers that have at least the following characteristics :

  • they take place between member states of the European Economic Area (irrespective of the nationality of the involved customers);
  • they are for euro or other currencies issued by an European Economic Area member state;
  • they do not exceed the value of euro50.000 ($44.705);
  • they are made following a cash deposit or the debit of an account (payments by cheque, debit cards etc, remain outside the scope of this legislation); and
  • they are carried out by a bank or other intermediary defined by the law (hereafter a bank).

The legislation aims to speed up international wire transfers and to lower the costs and risks thereof for customers. As a result, banks have to pay interest in the event the transfer takes more time than agreed or than the maximum term provided by law. To make the market for wire transfers more competitive, the law forces the banks to provide their customers with detailed information on transfer terms, fees and cost per wire transfer, etc. Finally, the law provides that in case the wire transfer is not successfully made, the intervening bank will in principle be liable to its customer up to the amount of the wire transfer, but not exceeding euro12.500.

Customers may make specific agreements with their banks concerning a number of the above elements. It is consequently to be expected that large corporate customers will enter into agreements with their main banks in which they can waive one or more of the legal requirements, eg by allowing a monthly general statement of fees and costs of all international wire transfers, or by providing for different execution terms than those set by default by the law. Such agreements may not only be made at the intra-group level, but even on an intra-customer level for a customer holding bank accounts in different EEA member states. Customers that already entered into specific agreements with their banks may have to review these, taking into account this new legislation.

Michael Olislaegers

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