This is not some random Western Union fly-by-night process. These are serious bank-to-bank transfers with plenty of documentation about who's who on both ends. That documentation is required not only by bank policy but by law (e.g. IRS and anti-terrorism laws). The fact that the wire transfers are highlighted so much in the charges is that they are interstate transactions, which makes them federal crimes rather than state crimes. Which gives the Feds an excuse to get involved.
In most US banks, sending a wire is an "event" since wires often go overseas and so KYC, suspicious transactions and sanctions are implicated. The fact that someone is sending a wire--as opposed to a multinational--is itself evidence of a suspicious transaction.
That won't be wire transfers, that'll be some kind of local interbank transfer. A wire transfer is still complicated (paper forms), slow and expensive to send to other countries.
You also have to give your name and address to the recipient bank to somehow prove you're not laundering money or funding terrorism.
Wire transfers can be reversed in some cases but it's not as simple as filing a chargeback; AFAIK it requires cooperation between law enforcement and the recipient bank.
I'm not an expert in this area, but from what I have gathered with respect to domestic Fedwire based wire transfers:
Fedwire is arguably the main settlement system used in the US between banks that participate in the federal reserve, when correspondence accounts are not in use. (Even other systems that claim to be settlement systems seem to often end up using FedWire for final settlement). The actual settlement is simply a debit and credit in the bank's accounts with the Fed. But while that does technically settle payment, in practice more information is needed, as the bank's accountants need to know what this was for, so they can keep their accounts up to date. Therefore metadata can be attached to the transfer. Without that it would be more complicated to figure out what exactly just got settled.
But when one is trying to send money not just between banks, but between customers of banks, even more metadata is generally needed. You are correct that at least in theory, the field for the target account would clearly who is getting paid. (Obviously the org receiving the wire will often generally need some additional metadata about what the payment is for, in much the same way banks do, hence the use of fields like 4320.)
I suspect that the receiving bank's handling is usually mostly automated (especially with larger banks), but that there are some safeguards that sometimes stop things for manual review both for correctness concerns (like making sure the name of beneficiary is even remotely close to the name associated with that account number) and for security considerations (flagging suspicious transactions to have further verification). And of course, if things are incorrect and things are not caught by the safeguards, it requires human effort to fix.
The receiving organization's steps seems to often be at least somewhat manual. (But this can vary, orgs that receiving thousands of transfers a day likely automate more than those that receive just a few.) I get the feeling some organizations with the capability of automatically processing most incoming wires simply don't, because having a person look at the incoming wire, and review what the automated processing will do before clicking an "approve processing" button can catch other mistakes, some of which could be a pain to unwind manually.
Also, Something to take into account is that, most of the time, delays in wire transfers are due to bank compliance checks imposed by states! (In addition with bank usual incompétences)
Wow. At that cost, I assume American banks must be using a combination of telegraphs and the Pony Express to settle their wire transfers.
"You see, sending money across state lines is not easy. There needs to be insurance in case wild natives attack and steal the leather bag containing those money orders... It's only fair that we pass that cost on to the customer."
The wire transfer is just how the money exchanges hands. There would be a contract of some sort defining why that money is changing hands, and with what strings attached.
Wire transfers often are not able to be undone once they happen (and are accepted by the other bank). This is the reason why there's so much verification that happens in wire transfers. (I helped develop 2nd factor authentication used for authenticating wire transfers for a financial company)
Tl:dr; frequent transfers to South Africa for a long time that led them to categorise him as a Money Service that needed to provide business documentation. From his conclusion it appears that the DoJ rules would lead any bank to do the same, so now he uses wire transfers instead of ACH with his new credit union account.
According to Bank of America’s official data, the $302
billion bank charges $30 for outbound domestic wire transfer
and $35 for outbound international wire sent in foreign
currency.
But, Fedwire, the official real-time gross settlement funds
transfer system operated by the United States Federal
Reserve Banks that allows banks to electronically transfer
funds, charges $0.25 per transaction.
The bank, not FedWire, must cover the cost of fraud.
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