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Originally Posted by LivinLOS
I thought SWIFT was just a bank identifying code (LIKE IBAN now)... I know my Thai bank has SWIFT, most seem to these days..
Swift codes also seem pretty logical like barclays is BARCGBXX with XX being a number for the branch. My Kasikorn bank has just changed from TFBKTHXX or similar (cant be bothered to go look it up) for Thai Farmer etc to KASKTHXX with the renaming of the bank to Kasikorn..
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Yes you are right, but one bank will not pay money to another bank unless authentication keys (couldn't remember the term before) have been swapped by those two banks.
Barclays Bank London could not send money using SWIFT to Bangkok Bank in Bangkok unless they had swapped those keys. This is why there are what is known as "correspondents".
For example, a customer of Barclays Bank in London goes to his branch and asks them to wire 10k baht to his TG who holds her account at Bangkok Bank, Patong. Barclays are unlikely to have swapped authentication keys with Patong branch of Bangkok bank, by are very likely to have done so with the Bangkok office. Barclays send the SWIFT message to Bangkok and get them to make the payment on their behalf, i.e. to Patong. What Barclays cannot do is send the message directly to Bangkok Bank, Patong.
Another example would be if Barclays and Bangkok Bank had not swapped keys at all, then Barclays would no doubt have a correspondent in Bangkok who would then affect the payment. Let's say Thai Farmers Bank Bangkok is Barclays' correspondent, then Barclays send the SWIFT payment to Thai Farmers Bank, Bangkok who then in turn forward to money to Bangkok Bank, Bangkok and they in turn send the money on to their Patong office. At each stage, authentication keys would need to have been exchanged in order for the money to be moved from bank to bank, apart from the part which is branch to branch.
Strictly speaking this is not exactly how it works, but unless you have been inside banking and fully understand how SWIFT does work, then it is sufficient to explain things here.
Authentication keys are files that are swapped once and then hold by each bank for a pre-determined period of time. Each set are unique to that pair of banks and are encrypted in a way that makes it impossible (supposedly) for outsiders to crack, as the actual key code used would be different for every single transaction.