The four bank-detail errors that actually fail, and the checks that catch them

The source material outlines four critical errors that can occur during bank transactions, which can often go unnoticed by initial validation checks. These errors include:

1. IBAN checksum errors: IBANs have built-in error detection, which involves specific two-digit check digits. By rearranging the IBAN characters and applying a mod 97 operation, one can validate the checksum. However, if the length of the IBAN is incorrect, it can also be flagged as invalid, even if the checksum is correct.

2. Sort code errors: UK sort codes are six digits long, but when treated as integers, leading zeros can be lost, resulting in a five-digit code. This can be easily identified by checking the length and whether the number contains only digits. If it's five digits, it likely indicates a lost leading zero. Conversely, seven digits indicate that the account number has merged with the sort code field.

3. BIC errors: SWIFT/BIC codes are either eight or eleven characters long, consisting of four characters for the bank, two for the country, two for the location, and optionally three for the branch. The shape of the BIC can be verified using a regex, and the country code in the BIC must match that of the IBAN. This validation helps catch errors where the BIC belongs to a different country than the IBAN.

4. The most challenging error: mismatches in payee names and legal entities: Despite having valid IBANs, BICs, and sort codes, payments can still fail at the receiving bank due to discrepancies between the payee's legal entity name and the name provided in the payment instruction. This issue cannot be caught by local validation checks and requires additional verification from the payer, such as explicitly requesting the legal entity name during onboarding.