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#2258190 - 08/13/21 01:11 PM Unauthorized wire transfer
Anonymous
Unregistered

I have a hypothetical scenario which could use the expertise of this board.

Bank A sends a wire for their customer to Bank B for $1000. The customer at Bank B walks in and withdraws the funds.

The next day, Bank A's customer walks in and says "this is an unauthorized transaction! I didn't do it -- it's fraud!"

Bank A goes to back B requesting that the funds be returned. Is Bank B required to return those funds, taking a loss on their end? And what law/regulation would cover this?

Thank you!

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#2258193 - 08/13/21 02:01 PM Re: Unauthorized wire transfer Anonymous
osucpa Offline
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Joined: May 2011
Posts: 1,398
To me this would be between Bank A and their customer. Bank B was following the wiring instructions.

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#2258197 - 08/13/21 02:30 PM Re: Unauthorized wire transfer Anonymous
Rocky P Offline
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Joined: Jun 2003
Posts: 7,239
Florida
Agree with osucpa. Also, (hypothetically of course), Bank A needs to either firm up their wire policies, or increase training about the employee who let that one slip through.
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#2258199 - 08/13/21 02:36 PM Re: Unauthorized wire transfer Anonymous
HappyGilmore Offline
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Joined: Jun 2004
Posts: 19,312
Pulling people out of the ditc...
Bank B is under no obligation to return the funds, whether they are available in the account or not. If the funds are available, bank B may choose to return, but only if a letter of indemnification is provided by bank A.

whether funds are returned or not, Bank B does need to look at this to see if potentially they have customer that is knowingly or unknowingly acting as a mule for fraudulent transactions. Turning a blind eye is not an option in this day and age.
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#2258208 - 08/13/21 03:03 PM Re: Unauthorized wire transfer Anonymous
Anonymous
Unregistered

OP here -- thanks everyone, that's what I thought. Is there a specific law or regulation that you would cite that speaks to this?

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#2258209 - 08/13/21 03:14 PM Re: Unauthorized wire transfer Anonymous
Anonymous
Unregistered

That's why wire fraud is a bazillion dollar business. Once that "send" button is pressed, those funds are gone.

Think about all of the seniors that have been scammed over the years. All of them lost their money because Customer at Bank B is under no obligation to return the funds. The issue is with the original Customer, and Bank A. And truthfully, just the original Customer. I doubt even Bank A, if they have followed their wire instructions properly, are under any obligation for loss.

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#2258228 - 08/13/21 07:14 PM Re: Unauthorized wire transfer Anonymous
HappyGilmore Offline
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Joined: Jun 2004
Posts: 19,312
Pulling people out of the ditc...
Originally Posted by Anonymous
OP here -- thanks everyone, that's what I thought. Is there a specific law or regulation that you would cite that speaks to this?
about bank B having to return the funds or not? no, there is no specific law or regulation
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#2258241 - 08/16/21 06:34 AM Re: Unauthorized wire transfer Anonymous
rainman Online
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rainman
Joined: Nov 2004
Posts: 3,021
This is all covered in UCC Article 4A. Mostly this issue is covered in 4A-211, 4A-209, and 4A-204. Once a payment order has been "accepted" by the beneficiary's bank (which is roughly defined in 4A-209 to mean that the bank has paid the beneficiary or credited the beneficiary's account), it can't be cancelled or amended under 4A-211 without the beneficiary's bank's consent. There is no obligation for the beneficiary's bank to consent.
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