INTERNATIONAL BANK ACCOUNT NUMBER (IBAN)

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1 INTERNATIONAL BANK ACCOUNT NUMBER (IBAN) What is IBAN? International Bank Account Number (IBAN) is a standard account number which is developed within the framework of European Union Regulations. The main purpose of IBAN is to facilitate automatic processing of money transfers, prevent delays and any extra costs due to the use of wrong account numbers in money transfers. IBAN System has been implemented in 46 European Countries up till now. Although it is originated in European Union, other countries like Tunisia, Turkey, and Saudi Arabia have also implemented IBAN for its benefits. Advantages of IBAN in Money Transfer The structure of account numbering methods and number formats of each country and each bank are different and this leads to errors and delays in the completion of bank transfers. As the business and financial transfers are globally increasing, the need has arisen to develop a special number for transfer of funds in domestic and foreign currencies. IBAN was created to help resolve this particular issue and facilitate electronic banking transfers through the clear and precise indication of the beneficiary account number in transfer orders. IBAN has also allowed sender banks to verify the validity of the provided beneficiary account number. In the countries that use IBAN, an IBAN is generated for each of the bank account numbers. It includes the two check digits which are calculated with a specific mathematical algorithm. When a customer, who intends to make a payment transfer, gives the beneficiary s IBAN to the sender bank, the sender bank will validate the check digits of IBAN before the payment transfer reaches the beneficiary s bank. Therefore if the beneficiary s IBAN is incorrect, the payment transfer will be stopped before transmitting it to the beneficiary s bank. The Use of IBAN Assume that, Customer-2 will make a money transfer to Customer-1 1

2 1-) Customer-1 gets the IBAN of her or his account from her or his bank; Bank-1. 2-) Customer-1 provides the IBAN of her or his account to Customer-2 3-) Customer-2 requests her or his bank; Bank-2, to transfer money using the IBAN of Customer-1. 4-) Bank-2 checks if the IBAN of Customer-1 s account is correct by calculating the IBAN validity algorithm. If the IBAN is correct then the transfer continues. If not, the transfer is stopped. The transfer is executed with validated (correct) IBAN, hence, the account of Customer-1 will be credited faster and easier when the transfer message is received by Bank-1. IBAN Structure IBAN is unique for each account and includes numbers and letters. Thus, every account may have an IBAN and every IBAN designates one account. First four digits of IBAN include two digits for Country Code and two Check Digits to verify the validation of the IBAN. The remaining part of IBAN includes the national account number, (named as Basic Bank Account Number-BBAN). Structure and length of the BBAN vary between countries, provided it must have a fixed length of no more than 30 digits and a Bank Identifier in a fixed position. The length, format and elements of the remaining part are determined by the country itself. 2

3 The Lebanese IBAN consists of a compound number of twenty-eight alphanumeric digits and structured as follows: Lebanese IBAN Digits The Bank Identifier Code of BDL in IBAN is Below are samples of IBAN account numbers in few Countries: Name of country IBAN length IBAN print format example Italy 27 IT60 X France 27 FR M Germany 22 DE United Kingdom 22 GB29 NWBK Turkey 26 TR Saudi Arabia 24 SA Tunisia 24 TN Presentation of IBAN When the IBAN is printed or written on paper, it is written from left to right in groups of four digits separated with spaces. Paper Representation of IBAN IBAN: LB

4 In electronic transactions, the IBAN is used without spaces and non-alphanumeric characters (punctuation mark, slash, etc). Electronic Representation of IBAN LB IBAN Usage in Lebanon Use of IBAN in Lebanon will start on January 1 st, Commencing this date, all the banks in Lebanon should have generated an IBAN for each account that is used in money transfer. Besides, banks will be accepting and executing domestic and international transfers that include beneficiaries' IBAN, Starting July 1 st, 2010, IBAN use will be mandatory, and for this reason banks will: 1- Include the IBAN of the sender in all the outgoing payment transfers issued from the accounts of its clients. 2- Reject all incoming and outgoing payment transfers not including the beneficiary s IBAN except for domestic transfers within the bank itself. 3- Reject international incoming payment transfers not including the beneficiary s IBAN except for international transfers between the banks accounts. IBAN for the Accounts at BDL Banque Du Liban (BDL) is the only authorized institution to issue and provide the IBAN for each bank account that is used in money transfer at the Central Bank. What Should BDL Clients Do? Since the implementation and the use of IBAN will begin on January 1 st, 2010, and will become mandatory starting July 1 st, 2010, and in order to be able to carry out the money transfers as defined above, clients of the Banque Du Liban should: Request their IBAN numbers corresponding to each of their bank accounts at BDL from the Current Operations Department or from BDL branch in their region in case they had not been notified with these numbers prior to January 1 st, Use the IBAN to identify their BDL account that is intended to be debited in any money transfer they request from BDL. Use the beneficiary s IBAN in all domestic transfers and international transfers to countries adopting IBAN. 4

5 Provide all persons who perform money transfers to the clients who have opened accounts at BDL, with the IBAN for these accounts to be adopted when carrying out any transfer in their favor. IBAN Client Services: Extensions 4024 / 4068 / 4065 Direct Line: iban@bdl.gov.lb Website: 5