Are Bank Transfers Safe?

When looking for the safest ways to send money, sending your money via a bank transfer can be a convenient way to transfer your money either domestically or internationally, but it does require a certain level of trust in the person or organisation you are sending your money to, not to mention the institution you are relying on to transport your money.

Until you receive confirmation that your money has been safely received on the other end, it may not be explicitly clear what exactly is happening to your funds once they leave your account. Particularly for those making international transfers, that can be a worrying 5 to 7 working days wondering if your money is still safe.

Is it safe to pay by bank transfer?

Money transfers from your bank are usually a fast, safe, and convenient way of sending money. Provided care is taken that you are sending your money to a trusted recipient. Also, you need to make sure your bank is a good money transfer provider. Read on for a better overview of the rules and regulations banks and money transfer companies have in place to keep your money secure.

Your options for making safe bank transfers

• Making a transfer with your bank: Initiating a bank transfer with your bank is a convenient way to send money, whether you’re simply sending your half of the bill to a friend on a night out, or are sending large sums of money home to family abroad.
• Bank transfers are considered a secure way to send money, some will allow you to wire money with a credit card or debit card, but that doesn’t necessarily mean they are the best method when you consider other factors such as fees and transfer time. There are ways to wire money for free, check our guide on making free wire transfer to learn more.

New bank transfer safety rules 

Earlier in 2020, new bank transfer rules became law in order to protect customers further when making domestic wire transfers. Major banks are now required to have increased security checks known as ‘confirmation as payee’ – a measure that was first introduced in October 2018 but only became law on the 30th of June 2020.

The security measures mean that as well as requiring your recipient’s bank account and sort code for a domestic wire transfer, you are now also required to supply your recipient’s full name. If the name given does not match with the bank account on record, your bank will notify you before you make the transfer.

These rules come into place in order to tackle bank fraud scams, in which people would pose under someone else’s name in order to trick others into sending money. Major banks including First Direct, Halifax, Lloyds, RBS, Bangkok Bank, NatWest, Nationwide, Santander, and TSB have now implemented these additional measures. 

Bank transfer regulations

Banking regulations are constantly updated to meet the demands of modern changes and technological development. Here is a list of banking regulation trends that you can expect to see in 2022:

• Digital assets:  the regulation of digital assets will increase. There are 2 key areas where this takes place. The first is regulated entities such as banks, broker-dealers and money transmission entities. The second is financial instruments like securities, futures and deposits. 
• Third-party risk management: regulators understand that the financial ecosystem is expanding. Therefore, regulators will focus their attention on third-party financial systems that interact with banks. 
• Consumer protection: in 2022 you can expect to see an increased focus on responsible and fair banking practises to protect consumer interests.
• Anti-money laundering (AML) and compliance: AML reform is in progress that will improve the balance between compliance with regulations and adopting new approaches. 

Canadian Regulators

We created the following guides about some organisations to help customers by providing relevant information related to the process of sending money in Canada:

• CDIC (Canada Deposit Insurance Corporation): it helps customers by ensuring their money always is protected.
• FCAC (Financial Consumer Agency of Canada): ensures customers are protected by the laws against money transfer companies.
• FINTRAC (Financial Transactions and Reports Analysis Centre of Canada): investigates and detects money laundering.
• IIROC (Investment Industry Regulatory Organization of Canada): it is in charge of overseeing the trading activity and investments in the Canadian markets
• PC (Payments Canada): also known as Canadian Payments Association, it makes sure the Canadian economic system is trustable.

What can affect the safety of bank transfers?

Incorrectly entered digits or information

It is of paramount importance that you check you have the correct information for your bank transfer before you initiate it. This includes checking the bank account number, sort code, IBAN/BIC, and the name of your recipient is all as it should be.

SWIFT network

While the SWIFT system is considered secure and is used to transport billions across the world every day, it is not completely invulnerable to cyber hacks. The SWIFT network is considered a secure way for banks to send information to one another, including money transfer information. However, the network also means that this information can go through a number of institutions before it reaches your final destination, and the most stops, the higher the risk for your information to be intercepted.

With that said, the most important thing you can do to ensure your money stays safe when sending it via bank transfer is to verify that you are absolutely certain you have the correct information for your recipient and that you are sending your money to someone you trust before you initiate a transfer.

Transfer securely with money transfer providers

Money transfer providers are an alternative way to send money via bank transfer across the world. These companies are a popular alternative to traditional banks because they often have lower fees, better exchange rates, and faster transfer times, but an understandable concern is how they keep your money safe.

Most reputable money transfer companies will be regulated by the Financial Conduct Authority (FCA). Operators that we recommend regulated by the FCA include  WorldRemit, Wise, XE, Currencyfair, Currencies Direct, Key Currency, Instarem and TorFX (plus many more). The FCA ensures that a transfer provider is legitimate and has the necessary security in place to provide safe money transfers.

In addition, most transfer providers will provide details of the additional security measures they have in place. For example, most transfer companies have encryption technology and multiple verification steps to protect your account and your money.

Bottom line: how safe are bank transfers?

As a method of sending money from one account to another, bank transfers are inherently safe. Human error is most likely to play the biggest part in your transfer going wrong, so here are a couple of key takeaways to ensure your transfers are hassle-free:

• Always ensure you trust the person or organisation you are sending money by bank transfer to
• Double-check that you have the correct information for your recipient, including the account and sort number
• If you are sending money to someone you don’t know, consider an alternative method such as using your credit card which gives you additional protection

Cheaper alternatives to bank transfers

Bank transfers do not provide the best value for sending money internationally. In most cases, banks charge some additional fees and markups that make international bank transfers more expensive.

If you would like to learn more, you can check the following bank guides depending on where you are sending money from and which bank you are using:

• If you are sending money from the US, you can use Wells Fargo (see Wells Fargo exchange rates and fees), Regions Bank (check Regions Bank exchange rates and fees), or Bank of America (view Bank of America exchange rates and fees).
• If you are sending money from Canada you can use TD Canada Trust (see TD Canada Trust exchange rates and fees), or CIBC (check CIBC exchange rates and fees).
• If you are sending money from India, you can use ICICI Bank (see ICICI exchange rates and fees).
• If you are sending money from another part of the world you can use Citibank (see Citibank exchange rates and fees) or Standard Chartered (check Standard Chartered exchange rates and fees).

*You should have an account to send money via the banks mentioned above.

Switch over to specialist transfer providers to save money on fees and currency conversions. Take the time to check out the live rates of money transfer companies using our comparison engine. Shop around to get the best deal and you will save large sums of money compared to banks.

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