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As far as I know the "IBAN Only rule" which was recently adopted states that for credit transfers within the SEPA zone, an IBAN is sufficient to identify an account and the BIC is no longer required. I've found an article explaining IBAN and BIC which mentions the change and there are more specifics on the "IBAN Only rule" on this article from the same site. This and other sources all indicate that the IBAN only rule should have been in effect for months now.

But I just discovered that a recent transaction was refused by my new bank because the BIC, which I left empty, didn't validate. The fine print on the digital transfer form says this about the BIC code: "this field is optional for SEPA transfers within [country]". My previous bank correctly allowed me to leave the field empty. If it matters, the country of origin for the transfer is listed as using SEPA Credit Transfers for 100% of all credit transfers within the zone.

Can my bank still require me to provide a BIC? Does the IBAN only rule not cover the end-user aspect? I was under the assumption that the more convenient and less error-prone user experience was the main point of this change.

If this does indeed violate the IBAN only rule, is that potentially a red flag about my bank's system? Should I be concerned that their implementation of other aspects of their system, such as security, is equally sloppy?

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  • While I'm aware that there are some European laws involved, I believe this is sufficiently on-topic here as it's something all Europeans will deal with when handling their finances and the answer could have impact on how to choose the right bank. Several other (untagged) questions exist on the subject and I'm hopeful that someone with banking experience can shed light on what the real impact is (or should be) for end users.
    – Lilienthal
    Nov 28, 2016 at 19:28

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Can my bank still require me to provide a BIC? Does the IBAN only rule not cover the end-user aspect? I was under the assumption that the more convenient and less error-prone user experience was the main point of this change.

The IBAN only is still being implemented by quite a few banks. Internally the networks used still need BIC. Quite a few banks have upgraded their systems so that it makes it optional for end user, but internally populates the right BIC so that payment can be processed correctly.

If this does indeed violate the IBAN only rule, is that potentially a red flag about my bank's system? Should I be concerned that their implementation of other aspects of their system, such as security, is equally sloppy?

Without getting into specifics, your Bank may have taken an exception approval for a certain set of customers and/or applications where they would introduce IBAN only at a later point in time. As the regulation covers Sepa initiation and not SIWFT initiation, quite a few Banks can get away saying the system/screen is actually SWIFT initiation and internally this gets converted to SEPA so that its cheaper for customer. The IBAN only rule is not mandated for SWIFT initiations [even if these get converted to Sepa].

This is a complex change for Banks and some may have dealt with it, some may need more time. This alone does not reflect whether a Bank's technology is good or not. There are quite a few aspects to this.

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  • So the "IBAN only" rule covers SEPA credit transfers (SCT) but there's a loophole where banks can argue that the credit transfer service they're providing is not explicitly an SCT? And because the inter-bank traffic is still via SCT they're compliant on that front and can claim 100% SEPA-compliance? This article on the complexity involved in IBAN-only. As you say the problem seems to be that the transfer still needs to be routed and the bank is now responsible for that aspect without officially being able to require the (BIC) routing code.
    – Lilienthal
    Nov 29, 2016 at 8:43
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    @Lilienthal Essentially yes. You have summarized it quite nicely. The entire payment routing and networks runs on BIC. So it will be some time till we build a new network or upgrade existing network that does not fundamentally rely on BIC. Till such time there are issues and Banks are trying to mitigate this in a phased way.
    – Dheer
    Nov 29, 2016 at 9:28
  • "The IBAN only is still being implemented by quite a few banks." We are talking about the SEPA zone, aren't we? Here, the IBAN is nowadays the basic of all payments.
    – glglgl
    Feb 15, 2019 at 8:34
  • Realised I never accepted this back when I asked it. Bank is still doing it 4 years later so I guess I'm still getting SWIFT transactions... :)
    – Lilienthal
    Jan 29, 2021 at 14:16

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