What Is a Routing Transit Number?

A routing transit number is a nine-digit numerical code used to identify a banking or other financial institution for the purpose of clearing funds or processing checks in the United States. The routing transit number, as it appears on a check, specifically denotes the banking institution that holds the account in which funds from the check are to be drawn.

Routing Transit Number Explained

The first four digits of any RTN code will designate the Federal Reserve Bank of the district where the institution is located. The next four digits denote the bank itself, while the last digit is a classifier for the check or negotiable instrument.

RTN numbers are often used when setting up a wire transfer or direct deposit relationship with one's personal or business bank.

A wire transfer is an electronic funds exchange across a network administered by hundreds of banks worldwide. While no physical currency moves among financial institutions during a wire transfer, information does pass between banks, with regards to the recipient, their bank account number, and how much money being received. A routing transit number is therefore critical to ensure sensitive information is directed to the appropriate receiving party.

Regarding a direct deposit, senders often use this method for efficient income tax refunds and paychecks. Here, a sender will deposit electronic funds directly into the receiver’s bank account instead of via a paper check. A RTN again is useful in specifying the domain and particular party to whom to direct information.

RTN Fraud

In January 2018 in Tennessee, a jury found citizens Keith Beane and Heather Ann Tucci-Jarraf guilty of money laundering. In addition, they found Beane guilty of wire fraud.

Beane took advantage of automatic delays present in money transfers within the United States banking system to purchase certificates of deposit (CDs), using the U.S. Federal Reserve’s routing number. Coupled with a fake checking account number, Bean quickly liquidated the CDs and placed the new funds in his USAA accounts. He withdrew these funds immediately, prior to the transaction being approved.

With this ploy, he was able to open $30 million in CDs prior to the USAA realizing the fraud. Beane paid off debts and purchased a $500,000 motor home, according to prosecutors. The routing transit number of the U.S. Federal Reserve was key in allowing him to pull off the financial stunt.