DEFINITION of 'Routing Transit Number (RTN)'

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.

BREAKING DOWN 'Routing Transit Number (RTN)'

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, his or her bank account number, and how much money he or she is receiving. 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 pay checks. 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.

Recent News Regarding Routing Transit Number

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.

RELATED TERMS
  1. Check Routing Symbol

    Check Routing Symbol is a set of numbers appearing as the denominator ...
  2. Transit Item

    A transit item is any check or draft that is issued by an institution ...
  3. Bank Wire

    A bank wire is an electronic message system, which allows major ...
  4. Immediate Credit

    Immediate Credit is the Federal Reserve practice of "clearing" ...
  5. Wire Fate Item

    Wire fate item refers to a request by a bank when it sends a ...
  6. Regional Check Processing Center ...

    Regional Check Processing Center - RCPC - is a local Federal ...
Related Articles
  1. Investing

    Best Ways to Send Large Sums of Money Abroad

    Understand why it may be difficult to send large sums of money internationally. Learn about the top five ways to send large sums of money abroad.
  2. Personal Finance

    10 Bank Promotions That Pay You To Open An Account

    Find out which banks are running cash promotions this summer.
  3. IPF - Banking

    Top 5 Reasons Banks Won't Cash Your Check

    Learn the top reasons that a bank won't cash your check, and find out what steps you can take to prevent those scenarios from happening.
  4. IPF - Banking

    Which Banks Pay the Highest Interest Rates on Savings Accounts?

    Online banks offer the best savings account interest rates. Not all banks offer the same features, so it pays to read the fine print.
  5. Personal Finance

    The 8 Best Bank Perks

    Many banks are now offering free perks to entice new customers.
  6. Personal Finance

    How to Cancel a Check

    If you've had a personal check lost or stolen, the next best step is to cancel the check by putting a stop payment on it.
  7. Insights

    How to Open And Access an Offshore Bank Account

    You don't have to be a master criminal or billionaire to open an offshore bank account. This article will walk you through the process.
  8. Investing

    Introduction To The Chinese Banking System

    As China steps into a greater role in the global economic system, their banking system continues to evolve.
RELATED FAQS
  1. What is the difference between an investment and a retail bank?

    Learn the primary differences between retail banks and investment banks by examining the business activities, type of clients ... Read Answer >>
Trading Center