Legal Definitions - remitting bank

A remitting bank is the financial institution that initiates a payment or transfers funds on behalf of its customer to another bank, often in a different location or country. It acts as the sender's bank in a transaction, responsible for sending the money as instructed by its client.

• Example 1: International Wire Transfer

  Imagine a small business owner in Canada needs to pay a supplier in China for a shipment of goods. The Canadian business instructs its bank to send a wire transfer for the payment. In this scenario, the Canadian bank is the remitting bank because it is sending the funds on behalf of its customer to the supplier's bank in China.

• Example 2: Online Bill Payment

  A person uses their bank's online bill pay service to settle their monthly credit card statement. When they schedule the payment, their bank processes the request and sends the funds electronically to the credit card company's bank. Here, the person's bank acts as the remitting bank, as it is dispatching the payment on behalf of its customer.

• Example 3: Automated Clearing House (ACH) Payroll

  A large corporation pays its employees through direct deposit every two weeks. The corporation provides its bank with a list of employee accounts and salary amounts. The corporation's bank then initiates an Automated Clearing House (ACH) transfer to send these salary payments to the various banks where the employees hold their accounts. The corporation's bank is the remitting bank because it is sending the payroll funds on behalf of its client (the corporation) to the employees' respective financial institutions.