June 3, 2006
Last Revised: May 23, 2012 4:50 PM
The world of international finance is highly specialized and populated by wizzard who speak in strange tongues.
I've just added, here, the information necessary for a customer of ours who buys bulk MSM, including a purchase from outside the US, as to how to pay for that purchase by sending us a wire.
The money should be wired to:
Bank of America
Magnolia Park BofA Branch
3400 West Magnolia Blvd.
Burbank, CA 91505
Phone 818 506 2678
Possibly 818 507 6700 (verified on web)
ABA 122000661 This is the ABA for regular checks, not for wires.
Account Number 04581-12645
This information is also confirmed from the most recent record we have of receiving wire payments from abroad for payment into our MSM account.
Special for BofA ABA Code For Wires: 121000358
Yes, use the same checking account number as shown above.
This Policy, originally, contained the following data, which will now be reviewed and possibly revised. KL
When Vibrant Life first became interested in purchasing Methyl Sulfonyl Methane (MSM) from a manufacturer in India we had, in VL, no idea of what would be involved in making a purchase from a foreign country and making payments to them.
We also did not contemplate a 9/11 attack and the changes in world attention on terrorists and particularly on money-laundering by not only drug-dealers but terrorists.
We also did not have any clue as to the different ways countries affect other countries with their rules, laws and practices covering the flow of "monetary instruments" within and particularly between nation states.
When we first started with Emmessar Biotech & Nutrition, Ltd., we had very formal signed agreeents covering our exclusive agency for their MSM distribution within the US and Canada.
Emmessar was, then, governed by banking and financial requirements imposed by India to ensure that anything they exported from India resulted in a return of "money" back into India -- and that the government got a full record of every part of the transaction.
We do much the same in the US, but the paperwork is different so it LOOKS different here.
One of the practices in India was to require that anyone who wanted to export goods out of India had to submit all the related documents, invoices, shipping documnts, packing lists and something called the "bill of lading" -- all of these had to go to this or that bank and eventually they got into the hands of some central bank of India.
Banks were so much under government control in India, as well as in the US, that governments would often require that all commercial transactions, such as a sale, export, shipment and charge for the cost be handled through not only the bank in the exporting country, but by more banks in any country where the goods might be unloaded.
Thus, Emmesar might be willing to "send us an invoice" for, say, $100,000 in the value of an MSM shipment, that simple procedure wouldn't fly in India.
Instead the rules in India required that Emmessar submit its papers about the shipment to a specified bank in India. THAT bank was mostly concerned with making sure that dollars flowed back into India -- whether or not they got to Emmessar was of secondary concern.
Since the people in India did not have much control over who would be the customers for these various exports, the procedure was developed that the bank in India would send these documents to a correspondent bank in the US.
The US bank, then, became responsible for collecting the money from the buyer and making sure that it got transmitted back to the bank in India.
Further assurances on payment were often required -- whereby the US importer would have to get, from his local bank, a "letter of credit" which said something like: "We, local bank, promise to pay $xxx within 90 days of the shipment arriving in the port and the customer inspecting the shipment and accepting it."
The customer, of course, would be the source for the funds, but the bank was putting its credit and credibility on the line.
This way not only would Emmessar be protected against non-payment, but even more importantly the Nation of India would be assured that stuff flowing OUT of India was exchanged for "money" flowing back into India. The money flowing into India was often in US Dollars which, often the India Government would "take" and convert to Indian currency to give to the exporter.
There were many, many rules like this.
The rules described here are nothing compared to the broader subject of international financial transactions and who is "in charge of their control?"
As financial markets grow more electronic and international, a big question looms: Who should regulate them? More bluntly: Who's in charge if there's a market meltdown?
That issue is now in the spotlight as the operator of the New York Stock Exchange sets plans to merge with Euronext NV, creating the first trans-Atlantic linkup of stock and derivatives markets. To understand how messy the regulatory questions can get, take a look at the dispute swirling around an electronic trading network known as ICE. Based in an Atlanta office park, it matches buyers and sellers of energy contracts around the world.
For more than five years, ICE (IntercontinentalExchange Inc.) has chipped away at the 134-year-old New York Mercantile Exchange, a traditional market where brokers and traders in giant Manhattan pits use hand signals and shout orders to each other. In February, ICE took aim at Nymex's signature product -- a futures contract on West Texas Intermediate crude. It quickly captured 25% of that market.
Nymex claims ICE owes much of its success to a regulatory quirk. Thanks to its purchase of a London petroleum market, where ICE later shut down the trading floor, ICE is overseen by regulators in the United Kingdom, not the U.S. (Source)
You could say that these financial markets are very, very strictly controlled by just whoever seems to be strongest and most aggressive in establishing a rule.
The consumer will always be the quivering effect of these rules, even if he doesn't have any clue that they exist or what they are.
In this context of a simple wire transfer of a relatively very small sum on money from a buyer to a seller, the banks at either end of the deal often added on large fees for whatever they did -- they were in a monopoly position whereby the government required a commercial firm to work with and through some specific bank.
That bank (in India, for instance) could only deal with "approved" banks in the US and would have to deal with one that was local to the importer and be a bank that knew the rules about international transactions.
One rule that is simple to understand is that every bank must have a unique "ABA" number.
The ABA Routing Number, (a.k.a. ABA number; Routing Transit number) devised by the American Bankers Association (ABA) in 1910, has served to identify the specific financial institution responsible for the payment of a negotiable instrument. Originally designed to identify only check processing endpoints, the ABA Routing Number has evolved to designate participants in automated clearinghouses, electronic funds transfer, and on-line banking. The ABA Routing Number has changed over the years to accommodate the Federal Reserve System, the advent of MICR, and the implementation of the Expedited Funds Availability Act (EFAA) and most recently, Check 21. (source)
Some banks, including Bank of America, use a different ABA number for the SAME checking account in the same building, if the ABA number is intended to route WIRES instead of paper checks. Thus, to send a wire payment into BofA you must have the special ABA number used for wire and ACH (Automated Clearing House) payments.
Automated Clearing House (ACH)
A type of payment system designed to allow corporations and consumers to reduce or eliminate the use of paper checks when making routine high-volume, low value payments. ACH systems process large volumes of individual payments electronically. Typical ACH payments include salaries, consumer and corporate bill payments, interest and dividend, and Social Security. Examples of private sector ACH providers in the U.S. include VISA, the New York Clearing House, and the American Clearing House. (source)
ABA numbers are unique to banks within the US. Banks outside the US (and inside also) typically have what is called a "SWIFT" code number.
In 1973, banks still communicated via telex -- not very secure, minimum standards and not automated either. Imagine receiving 10,000 telexes a day. So, 239 banks from 15 countries formed a cooperative to "automate the telex". They called it the Society for Worldwide Interbank Financial Telecommunication (no "s" at the end). S.W.I.F.T. (source)
Another number in the mix is "CHIPS":
CHIPS stands for Clearing House Interbank Payments System, and is the primary site for settlement of U.S. international foreign exchange and eurodollar transactions, as well as international and domestic trade transactions taking place through New York banks, New York Edge Act subsidiaries of regional banks, New York branches of foreign banks, and Article XII investment companies.
CHIPS is an example of a Automated Clearing House. Clearing houses were created to simplify the paperwork and the process of banks making payments to each other. (source)
CHIPS UID stands for Clearing House Interbank Payments System Universal Identifier. This is just a fancy name for an electronic clearinghouse database system, which facilitates the transfer of funds from both individual consumers and institutions. It is the back end of the automated clearing house (ACH) network, which is run by the National Automated Clearing House Association, and it provides the platform that allows exchanges to take place quickly and accurately.
Developed in the 1970s, the key to the CHIPS UID system is that its database contains all the necessary information to identify specific participants, such as name, address, routing number, account number, etc. However, all of this information is kept confidential within the system and each participant's information is linked to a six-digit code, which is referred to as the CHIPS UID.
Because the CHIPS UID number can be used by the clearing system to look up the needed banking information of a payment's recipient (e.g. routing number and account number), payment orders can be entered into the system simply with the CHIPS UID number. This simplicity reduces the occurrence of errors in transaction entry and speeds up the process for all parties.
As well, because the CHIPS UID number is linked to (but does not reveal) banking information such as an account number, the structure of this clearing system prevents a biller from knowing a payer's banking information, which increases the security and confidentiality of the system. The CHIPS UID system processes both domestic and international transactions and has long been the foremost method of moving U.S. dollars among the world's banks.(source)
We now receive "papers" from Emmessar -- papers that document a shipment to us and a payment due to them. These documents may or may not contain all the information that relates to an international payment.
When you are playing in this league of multi-trillions of dollars being moved here and there, electronically, every day, amongst the big boys, you generally just stay out of sight and follow the rules.
The rules can change at any time, but if you keep up with the rules you can stay out of trouble.
Here are the current secret codes that allow us to send money smoothly to India. This information was provided to us from Emmesar. Generally Emmessar is constantly engaged in international financial transactions whereas Vibrant Life is not -- so it is natural that Emmessar would have the data. We now have it in this Company Policy.
The BofA "Funds Transfer Request" form has various fields -- the information below has added to it the name of the field in which the data seems to go.
1. HSBC Bank ABA Routing Number is ABA ROUTING No. 021-001-088 (Beneficiary Bank Name, ABA#/SWIFT #)
2. HSBC INDIA, A/C. No. 000-04417-2, (beneficiary name, beneficiary account number)
3. HSBC INDIA SWIFT ADDRESS: HSBCINBB (Sent thru bank -- if available)
4. CHIPS CODE 302755
5. "Emmessar Biotech & Nutrition Ltd" CURRENT ACOUNT No. 002-670396-001. (Additional Instructions)
Normally, the Original documents are sent by HSBC India directly to BofA for collection. This involves Bank charges, that is charged by BofA to Vibrant Life. To avoid this Bank Charges, we have requested HSBC India not to send the documents directly to BofA for collection, but to send documents directly to Vibrant-Life. HSBC India have done this.
Now coming to the question of why the above 5 Points in blue colour (ABA No...etc) did not appear in the original documents.
If the original documents are sent by HSBC India directly to BofA, the above given 5 Point (ABA No..etc) information is mandatory on the part of HSBC India, to enable BofA to transfer the funds. This is because, HSBC India assumes the responsiblity to collect the money from BofA.
Now, as the documents are sent by HSBC India directly to Vibrant Life on our request, they are not responsible to collect the payment from you. Therefore HSBC India did not include the above 5 Point information in the original documents. Now it is for Vibrant Life to make the payment to Emmessar as per mutual understanding and agreement. Bank has no authority to insist on the quantum of payment or its timing.
That will do for now.