Exercise: Decide Reject or Return

Scenario one. HSBC in Hong Kong sends a pacs.008 for USD 60,000 to Standard Chartered in Singapore, which finds that the creditor account number does not exist and no customer account has been credited. The correct answer is a reject, so Standard Chartered must send a pacs.002 with status RJCT and reason AC01 to HSBC, with no settlement method and no return chain, because no money moves. Scenario two. Citibank in New York credits USD 120,000 to a beneficiary account, and the beneficiary then reports that the payment duplicates an earlier payment for the same invoice. The funds are already in the beneficiary account, so the correct answer is a return, and Citibank must send a pacs.004 for USD 120,000 with reason DUPL and settlement method INDA, while the return chain lists Citibank, the intermediary bank, and the original debtor in order. Scenario three. Deutsche Bank in Frankfurt receives a pacs.008 for EUR 80,000, and its sanctions screening flags the creditor name as a possible match. Deutsche Bank holds the payment, completes the screening, and confirms the match is false, so it releases the payment. No reject and no return applies, because the payment was never finally rejected and never credited in error. The correct action is to continue processing the original pacs.008, and, if the previous agent asked for tracking, to send an optional pacs.002 with status ACCP. There is no settlement method and no return chain, because no money is moving back, and inventing a return here would create a duplicate payment. Scenario four. Barclays in London credits EUR 45,000 to a customer, and the customer later discovers that the payment was sent to the wrong beneficiary because the debtor typed the wrong account number. The beneficiary agrees to return the funds, but Barclays deducts a EUR 20 charge. The correct answer is a return, because the creditor account was credited. Barclays must send a pacs.004 with a Returned Interbank Settlement Amount of EUR 44,980 and an Original Interbank Settlement Amount of EUR 45,000, with the charges elements showing the EUR 20 deduction. The settlement method is INGA, because the receiving bank should debit the account of the instructing agent, and the return chain lists Barclays, the intermediary, and the original debtor in order. Scenario five. Societe Generale in Paris receives a pacs.008 for USD 200,000, and its validation finds that the message is missing the creditor address, which is mandatory for this payment type. No account has been credited, so the correct answer is a reject. Societe Generale must send a pacs.002 with status RJCT and reason BE04 for a missing creditor address to the previous agent, and no settlement method applies. There is no return chain, because there is no return, and the debtor agent must obtain the correct address from its customer and send a fresh pacs.008. A return here would be wrong, because there is nothing to return, and the nostro accounts were never touched. Scenario six. JPMorgan Chase in New York credits USD 90,000 to a beneficiary, and the debtor bank then reports that the payment was fraudulent and asks for the funds to be returned in full. The beneficiary bank freezes the funds and agrees to return them, but it has already passed the payment through an intermediary in London. The correct answer is a return with reason FRAD. JPMorgan Chase must send a pacs.004 for USD 90,000, with settlement method INDA, so the intermediary debits the account of the instructed agent. The return chain is the longest in this exercise. It lists JPMorgan Chase as the returning agent, the London intermediary as the previous agent, and the original debtor bank as the agent before that, so every bank in the chain can follow the funds home.