SWIFT- is an acronym which stands for Society of Worldwide Interbank Financial Telecommunication. It is a cooperative organisation founded in 1973 in Brussels to establish a common process and standards for the transfer of funds. It provides a network that enables Financial Institutions to send and receive Transactions. It connects more than 11,000 Financial Institutions from more than 200 countries.
SWIFT network does not send the money itself, it rather provides a secure network which allows Financial Institutions to communicate with each other regarding submitted Orders by using SWIFT Codes. Orders which go through SWIFT are sent on one end and received on the other. It is a route which may involve communication between various Intermediary/Correspondent Banks through which Order comes to a Beneficiary of Transfer.
It was SWIFT system which standardised the IBAN and BIC formats and allowed more precise transfer of Orders between Financial Institutions. When assigned to a non-financial institution, the code may also be known as a Business Entity Identifier (BEI).
It works in the same manner as all other Clearing Systems.