MT202 Cov is a SWIFT message format for financial institution transfer. It is used to order the movement of funds to the beneficiary institution via another financial institution/Intermediary Bank. This is used in Cover mode of fund transfer. MT202 Cov is the enhanced version of MT202
Contents
Scope and Usage
In SWIFT most common way of wire transfer method an older version of serial transfer , where MT103( customer credit transfer/cash transfer) flows to the customer via different financial institutions in a serial fashion. The MT103/MT103+ can be sent directly to the next party in the transaction, who then sends the next MT103/MT103+ to the next party. This increases the time until the payment arrives into the beneficiary’s account.
Here comes into the picture MT202 Cov or the current form of serial payment, which are used to make the funds speedily available to the beneficiary customer and thus reduce the time. Here in this method, MT103/103+ is directly sent to the account with institution/Beneficiary bank by just sending MT202 Cov message to Intermediary institution.
Difference between MT202 and MT202 Cov
MT202 was the older version available for cover payments. The use of cover payments MT202, where the details of the beneficiary and originator were not usually present, represented a significant risk, particularly in situations where the underlying payment message (MT103) went directly to the beneficiary bank, often without passing through the same jurisdiction or filtering processes as the underlying MT202. This led for a new message MT202 Cov , which is more transparent and it has got the details of both Ordering and beneficiary customer. MT202 is no longer being used and it is mostly replaced by MT202 COV for cover payments.
In MT202 Cov sequence B , 50a and 59a i.e; Ordering Customer and Beneficiary customer details respectively are made mandatory fields and thus it overcomes the loopholes of MT202.