Why It Matters

Even the most comprehensive validation and monitoring controls cannot eliminate every issue. Occasionally, wire transfer payments will arrive with missing, incomplete, or questionable information about the payer or payee. Regulations such as EU Regulation 2015/847 and FATF Recommendation 16 require financial institutions to respond to these exceptions using documented, risk-based procedures. It is not enough to detect problems; institutions must be able to demonstrate how exceptions are assessed, resolved, and recorded in a controlled and auditable way.

What Is a WTR Exception?

An exception arises when a payment does not meet the required data standards. This could occur because mandatory payer or payee details are missing, corrupted, or entered in the wrong field. Sometimes the data may appear as placeholder text, contain irrelevant characters, or fail formatting rules due to incompatibilities between message formats like SWIFT MT and ISO 20022. Exceptions can happen in both outgoing and incoming transactions, often flagged by real-time validation systems, transaction monitoring tools, or manual review processes.

Core Principles of Exception Handling

Effective exception handling is built on a foundation of several core principles. First, institutions must maintain clearly documented standard operating procedures that define the full exception lifecycle from detection and classification through to escalation, remediation, and closure. Second, a risk-based approach must guide decision-making. Not all exceptions are equal; handling must take into account factors such as transaction value, jurisdictional risk, parties involved, and the sender's history.

Third, auditability is essential. Every exception must leave a clear, traceable record of what was found, what was done, and who approved the response.

Exception Handling Workflow