MT202 Cov is a SWIFT message format for financial institution transfer. It is used to order the movement of funds to the beneficiary institution via another financial institution/Intermediary Bank. This is used in Cover mode of fund transfer. MT202 Cov is the enhanced version of MT202
Video MT202 COV
Scope and Usage
Wire transfers sent over the SWIFT network were originally completed by the serial transfer of MT103 (customer credit transfer/cash transfer) messages from the initiating financial institutions to the customer via different financial institutions. In this process the MT103/MT103+ message is sent directly to the next party in the transaction, who then sends the next MT103/MT103+ to the next party. This increases the time until the payment arrives into the beneficiary's account.
The MT202 Cov form of wire transfer reduces the time taken for funds to reach the account of the beneficiary. This method involves the initiating financial institution sending a MT103/103+ directly to the beneficiary's bank and forwarding a MT202 Cov message to Intermediary institution(s).
Maps MT202 COV
Difference between MT202 and MT202 Cov
MT202 was the older version available for cover payments. The use of cover payments MT202, where the details of the beneficiary and originator were not usually present, represented a significant risk, particularly in situations where the underlying payment message (MT103) went directly to the beneficiary bank, often without passing through the same jurisdiction or filtering processes as the underlying MT202. This led for a new message MT202 Cov , which is more transparent and it has got the details of both Ordering and beneficiary customer. MT202 is no longer being used and it is mostly replaced by MT202 COV for cover payments.
In MT202 Cov sequence B , 50a and 59a i.e; Ordering Customer and Beneficiary customer details respectively are made mandatory fields and thus it overcomes the loopholes of MT202.
References
Source of the article : Wikipedia