Letter EPC038-10

Brussels, 31 March 2010

To the attention of all SCT Scheme Participants

Ref: SEPA Credit Transfer and the reason code for non-acceptance by the Beneficiary Bank

Dear SEPA Credit Transfer Participant,

After 2 years of SCT processing in the SEPA Credit Transfer world, the EPC has been informed that in the
case of returns and rejects, there is a trend that the real reason code for returning a Credit Transfer is not
given by the Beneficiary Bank. In most of the cases the standard code “Reason not specified” is used as a
default value for all returns and rejects.

In order to halt this trend, it is strongly recommended that the codes used by all participants should be in line
with the real reason of the R-message as per the SCT Rulebook rules.

The SCT Rulebook defines a “Return” as a credit transfer which is diverted from normal execution after
interbank settlement, and is sent by the Beneficiary Bank back to the Originator Bank for a credit transfer
that cannot be executed for valid reasons such as wrong account number or account closed, with the
consequence that the beneficiary account cannot be credited on the basis of the information contained in the
original credit transfer message.

The SCT Rulebook defines a ‘Reject’ as a credit transfer which has not been accepted for normal execution
before interbank settlement.

The Codes of R-Messages have been defined for such cases to allow the Originator Bank to clear the issue
(eventually also with the originator of the SCT) and correct the original data of the transfer, to avoid sending
again the same transfer with the same error, generating the next return.

We encourage all SCT participants that are not using the defined codes to implement the appropriate actions
in order to be in line with the SCT Rulebook quoting the real reason code when instructing any R-Messages.

For your information:

• The procedure for return is contained in the SCT Rulebook under Chapter 4.4 “Exception Processing
Flow“.
• The Data Set “DS-03” defines the Return Data.
• The Reason Codes are listed in the Attribute AT-R03 and in the Implementation Guidelines.

This letter has been agreed by our SEPA Payments Schemes (SPS) Working Group and reviewed by the
Programme Management Forum (PMF).

Yours sincerely,

Gerard Hartsink Herman Segers

EPC Chairman EPC Secretary General

P.S.: Find in the enclosed annex the list of the actual available return and reject reason of a Credit
Transfer as defined in the SCT Rulebook and in the Implementation Guidelines

EPC AISBL Secretariat – Av. de Tervueren 12 – B 1040 Brussels Tel: +32 2 733 35 33 Fax: +32 2 736 49 88
Enterprise N° 0873.268.927 www.europeanpaymentscouncil.eu secretariat@europeanpaymentscouncil.eu
 Annex (provided for Information only)

Reason code for non-acceptance of the credit transfer

(These codes are applicable to the 2009 EPC Release)

The reasons for a Reject by the Originator Bank or the CSM are as follows:1

• AC01 Account identifier incorrect (i.e. invalid IBAN)

• RC01 Bank identifier incorrect (i.e. invalid BIC)
• AM05 Duplicate payment
• TM01 File received after Cut-off Time
• AG02 Operation/transaction code incorrect
• MD03 Invalid File format2
• RR01-04 Regulatory reason
• MS03 Reason not specified

The reasons for a Return by the Beneficiary Bank are as follows:3

• BE04 Account address invalid

• AC06 Account blocked, reason not specified
• AC04 Account closed
• AC01 Acc. identifier invalid (invalid IBAN or account number does not exist)
• RC01 Bank identifier incorrect (i.e. invalid BIC)
• MD07 Beneficiary deceased
• MS02 By order of the Beneficiary
• AG01 Credit transfer forbidden on this type of account (e.g. savings account)
• AM05 Duplicate payment
• AG02/MD03 Operation/transaction code incorrect, invalid File format4
• RR01-RR04 Regulatory reason
• MS03 Reason not specified

1
‘FOCR’ has been added in the 2010 Release to indicate a return resulting from a positive request for
cancellation recall
2
‘MD03’ has been deleted in the 2010 Release
3
‘FF01’ has been re-introduced in the 2010 Release to indicate a reject due to an invalid file format
4
‘MD03’ has been deleted in the 2010 Release

Letter EPC038-10 Open Letter to SCT Scheme Participants on the usage of the Reason Code for non acceptance by the
Beneficiary Bank.doc