Europe to Implement New IBAN Rules: List of Non-Participating Countries Revealed
New IBAN Traffic Light System to Enhance Wire Transfer Security Across Europe
Starting October 9, 2025, a traffic light system will be introduced across Europe to improve the security of wire transfers, with the exception of the UK and Switzerland. This system will indicate whether the International Bank Account Number (IBAN) belongs to the intended recipient, both online and at the counter.
The IBAN regulation will be effective regardless of the currency used, and it is intended to protect consumers and will not incur any additional costs. In Europe, except for the UK and Switzerland, the use of IBAN will provide a standardized account number format with check digits, reducing errors and misdirection in international transactions.
Switzerland, a member of the Single Euro Payments Area (SEPA), will participate in the IBAN system. This means that Switzerland will benefit from guaranteed payment timeframes and regulated cross-border transfer charges, increasing transparency and reliability for consumers.
In contrast, the UK, which is not a member of SEPA, will rely on other systems such as sort codes for domestic transfers and SWIFT/BIC codes for international transfers, and security will be maintained through bank authentication methods such as passcodes, biometrics, and multi-factor authentication. Cross-border euro payments may have different timing, cost structures, and procedural standards compared to IBAN-compliant countries.
The traffic light system will work as follows:
- If the light is green, everything is in order and the transfer is secure.
- If the light is yellow, there may be a typing error, a missing digit, or the first and last name may have been swapped. In this case, it is advisable to double-check the details before proceeding with the transfer.
- If the light is red, a warning will appear - this transfer should be checked again as it does not seem secure.
It is important to note that fraudsters often exploit the lack of name verification by sending money to false IBANs under known names. Therefore, anyone receiving such a request should take a close look and check carefully.
The IBAN regulation or recipient verification will be implemented throughout the European area by July 9, 2027. If there is no result, there may be a technical error - in this case, you should contact your bank directly.
In summary, the new IBAN traffic light system will enhance the security of wire transfers in Europe, while the UK and Switzerland will continue to rely on their own security measures. Consumers are advised to remain vigilant and check carefully before proceeding with any wire transfer.
[1] SEPA (Single Euro Payments Area) [2] IBAN (International Bank Account Number) [3] SWIFT (Society for Worldwide Interbank Financial Telecommunication) [4] BIC (Bank Identifier Code) [5] Multi-factor authentication [6] Sort code (UK bank account identifier)
- The IBAN regulation, effective from October 9, 2025, will extend across Europe, excluding the UK and Switzerland, thus standardizing account numbers and enhancing security in the banking-and-insurance industry and finance across Europe.
- With the IBAN traffic light system, financial institutions aim to protect consumers from potential fraud by vigilantly verifying recipient details, ensuring secure transactions in the industry, and prompting caution during any red or yellow light notifications.
