Failed Payment Investigation Process

Purpose

This document establishes the standard process for investigating failed, rejected, or returned payment transactions. It ensures that all payment failures are identified promptly, root causes are determined, clients are notified in a timely manner, and corrective actions are implemented to prevent recurrence.

Scope

This procedure applies to all payment types, including domestic wire transfers, international SWIFT payments, ACH transactions, direct debits, and bulk payment batches that have been rejected, returned, or otherwise failed to settle.

Classification of Payment Failures

Investigation Procedure

Step 1: Detection and Logging

1. Failed payments are detected via automated exception reports generated by the Core Banking System (CBS) at 09:00, 13:00, and 17:00 daily.
2. The Payments Investigation team reviews the exception queue and logs each failed payment in the Payment Investigation Tracker (PIT) system.
3. Each case is assigned a unique investigation reference number and categorised by failure type.

Step 2: Initial Assessment

1. The assigned investigator reviews the payment details, including the original instruction, system logs, SWIFT message trail (MT103, MT199, MT196), and any rejection codes.
2. The investigator determines whether the failure is due to an internal error, client error, or external party issue.
3. An initial assessment must be completed within four (4) hours of detection for high-value payments (above USD 100,000) and within one (1) business day for all other payments.

Step 3: Root Cause Analysis

1. The investigator conducts a detailed root cause analysis, reviewing all relevant documentation, system logs, and communication records.
2. Common root causes include: incorrect beneficiary details provided by the client, sanctions screening false positives, system downtime, correspondent bank processing errors, and cut-off time breaches.
3. For systemic issues (e.g., recurring CBS errors or clearing system connectivity problems), the investigator escalates to the Technology Operations team for resolution.

Step 4: Resolution

1. For client-attributable errors, the investigator contacts the client (or the client's Relationship Manager) to obtain corrected details and re-initiates the payment.
2. For Bank-attributable errors, the investigator arranges for the payment to be re-processed at no additional cost to the client. Any interest or charges incurred due to the Bank's error are credited to the client's account.
3. For external party errors, the investigator liaises with the correspondent bank or clearing house to resolve the issue, using SWIFT MT199 or MT195 investigation messages as appropriate.

Step 5: Client Notification

1. The client must be notified of the payment failure and the expected resolution timeline within the following SLA periods:

Step 6: Closure and Reporting

1. Once the payment has been successfully re-processed or the investigation is otherwise concluded, the case is closed in the PIT system with a full resolution summary.
2. A monthly Failed Payments Report is compiled by the Payments Investigation team and submitted to the Head of Payments and the Operational Risk Committee.
3. Recurring failure patterns are flagged for process improvement initiatives.

Escalation

If an investigation cannot be resolved within five (5) business days, it must be escalated to the Payments Manager. Cases unresolved after ten (10) business days are escalated to the Head of Payments for executive intervention. Any payment failure involving suspected fraud must be immediately escalated to the Financial Crime team.

Related Documents

• Domestic Wire Transfer Procedure
• International Wire Transfer (SWIFT) Procedure
• Incident Escalation Matrix
• Client Complaint Handling Procedure