What Happens When a Wire Transfer Is Rejected?

Wire transfers offer a reliable method for moving money between bank accounts. While efficient, these transfers can sometimes be rejected. Understanding the reasons for rejection and the steps to resolve them is important for both senders and receivers. This article details common reasons for rejection and outlines the procedures to follow if a wire transfer does not go through.

Why Wire Transfers Are Rejected

Wire transfers can be rejected for several reasons, often due to inaccuracies in the provided details. A common cause is incorrect beneficiary information, such as an invalid account number, a misspelled recipient name, or an incorrect bank routing number. If the name on the receiving account does not precisely match the name provided, the receiving bank may flag the discrepancy and reject the transfer.

Compliance issues also frequently lead to rejections, particularly concerning anti-money laundering (AML) regulations and sanctions lists. Financial institutions monitor transactions for suspicious activity and screen against lists maintained by the Office of Foreign Assets Control (OFAC). If a transaction or party raises a red flag during these checks, the transfer may be rejected. Technical issues or processing errors by either the sending or receiving bank can also lead to a rejection.

Sender’s Role When a Wire is Rejected

If your wire transfer is rejected, check for notifications from your sending bank. Banks typically notify senders via email, online banking alerts, or mail regarding a rejection and its reason. Contact your sending bank to obtain specific details about why the transfer failed, as they will have the rejection code or explanation.

Once you understand the reason for rejection, verify the beneficiary’s information with the intended recipient. This includes confirming the exact account number, the correct bank routing number, and the full legal name associated with the receiving account. A mismatch of even a single digit in the account number or a minor spelling error can cause rejection. After correcting any discrepancies, discuss with your bank the process for re-initiating the transfer or having the original funds returned to your account.

Receiver’s Role When a Wire is Rejected

As a receiver expecting a wire transfer that does not arrive, communicate with the sender to confirm the transfer was initiated and to inquire if they received any rejection notices. Confirm your banking details, including your full account number, correct routing number, and the exact name on your account, with the sender. Even minor discrepancies can cause a wire to be returned.

Contact your receiving bank to inquire about the expected transfer. Provide them with details such as the sender’s name, the amount, and the date the wire was sent. Your bank can check for any pending or rejected incoming transfers. Coordinate with the sender to ensure they have your accurate information for a potential resubmission of the wire.

Reclaiming Funds and Associated Costs

When a wire transfer is rejected, the funds are typically returned to the sender’s originating account. The return commonly takes between two to five business days for the funds to be credited back. This period allows for the necessary banking processes to reverse the transaction and reconcile the accounts.

Associated fees can be incurred due to a rejected wire transfer. While the full amount of the original transfer is usually returned, both the sending and receiving banks may levy processing fees for the failed transaction. A sending bank might charge a return fee ranging from $15 to $35, and a receiving bank might also impose a fee for handling the rejected inbound wire. Timely communication with both banks helps to expedite the return process and clarify any applicable charges.