Instructing Bank

DEFINITION of 'Instructing Bank'

One of the banks that plays a role in a transfer of funds between two parties. The instructing bank is the one that initiates the fund transfer process. It takes the instructions for the transfer from the customer regarding who receives the funds and the amount to be sent.

BREAKING DOWN 'Instructing Bank'

An instructing bank is also known as the ordering party. It is the opposite of an advising bank, which receives the transfer of funds and then alerts the receiving party that the transfer has been effected. The term refers to the role a bank plays in the process; the same bank can be both the instructing bank and advising bank on different fund transfers.

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