The Bank of Latvia » For All » Information to the Public » IBAN
New Bank Account Numbers
Riga, December 2, 2003
On January 1, 2004, banks in Latvia will
commence transfer to the IBAN, the new customer account number.
The IBAN (International Bank Account Number)
is an international account number standard developed by the European Committee
for Banking Standards and the International Organisation for Standardisation.
The IBAN is used internationally as banking information explicitly identifying a
customer's account with a financial institution. Currently the IBAN is used in
32 European countries and their territories.
In Latvia, the IBANs will be issued for all
customer accounts with banks (approximately 2 million), replacing the
customer account numbers currently in use and serving as account identifiers
henceforth.
The Latvian IBAN corresponds to the international
IBAN standard, and its structure is similar to that of customer account
identifiers used in cross-border payments in other countries. It will be
recognised in cross-border payment documents in all countries where the IBAN
standard has been implemented.
Within a year, all banks in Latvia will
replace their customer account numbers with the Latvian IBANs. Banks may choose
when exactly they would transfer to the IBAN and how long a time period would be
required; nevertheless, the transfer will have to be completed by December
31, 2004. As from January 2005, upon domestic payments, only those payment
documents containing the beneficiary's Latvian IBAN will be valid. Banks will
inform their customers about the replacement of account numbers by specifying
the IBANs in account statements, as well as by way of disseminating information
otherwise. Apart from that, the Bank of Latvia has published an
informational booklet on the IBAN, and it will be available in all banks
in Latvia.
Account numbers currently in use in Latvia differ
both in length and structure, increasing the possibility of error when the payer
indicates the beneficiary's account number. Hence the risk of the payment being
returned, delayed or even credited to another beneficiary (i.e. as a result of
error when specifying the account number) also increases. The implementation of
the IBAN will reduce the possibility of such errors, as customer account numbers
in all banks in Latvia will have a uniform structure, and they will contain
check digits.
The Latvian IBAN will consist of 21
characters: 2 letters (the country code) + 2 digits (check digits) + 4
letters (the bank identifier code BIC) + 13 characters (the account number; for
shorter account numbers currently in use, zeros will be added where characters
are missing). For example, if a customer's account number with a bank is
876543210, the respective IBAN will be LV34BANK0000876543210.
As from the beginning of 2004, upon receiving
from a customer a payment document with the beneficiary's Latvian IBAN, the
originator's bank will be able to check whether the specified IBAN is a standard
account number with the beneficiary's bank, thus preventing erroneous credit
transfers.
Upon receiving a payment with the Latvian IBAN,
the beneficiary's bank will be entitled to credit funds to the beneficiary's
account on the basis of the specified IBAN only, without checking other banking
details of the beneficiary, indicated in the payment document. This provision
has been introduced to facilitate straight through processing and to reduce the
number of payments which might be rejected or delayed because of any inaccuracy
in banking details of the beneficiary (inaccuracies in the registration number
of an enterprise, identity number or name).
The above provisions are binding on all credit
institutions registered in the Republic of Latvia and other financial
institutions offering non-cash transactions. Minimum requirements with respect
to the procedure of issue, validation and use of the Latvian IBAN are stipulated
by the Bank of Latvia's "Regulation for the Use of the IBAN", taking
effect on January 1, 2004.
The use of the IBAN in cross-border payments
within the European Union has been provided for by the Regulation (EC) "On
Cross-Border Payments in Euros". The regulation provides for the duty of
banks to issue the IBANs to their customers and the duty of customers to
indicate them in their invoices for cross-border business transactions in euros
within the European Economic Area (the EU countries, Iceland, Liechtenstein and
Norway). Compliance with the requirements of the Regulation will be essential
both for banks and all those customers who encounter cross-border payments
within the European Economic Area in their operations: unless the beneficiary's
IBAN has been indicated upon payments in euros, additional charges may be levied
on the customer by banks.
As a year has been allocated for the
implementation of the IBAN in Latvia (from January 1, 2004 to January 1, 2005),
but the requirements of the Regulation will take effect when Latvia joins the
European Union, customers who will not have been issued a Latvian IBAN by that
moment but who require it in their transactions with foreign business partners,
should turn to their bank requesting it to communicate the IBAN issued to them.
Kristaps Otersons
Deputy Head of Public Relations Department
Bank of Latvia
Kristaps.Otersons@bank.lv
