2015 - 2016

Bank accounts

Foreign currency account

Ms A went to her local bank branch to send NZD5,600 in American dollars via an international money transfer to a beneficiary in China. The payment went via a correspondent bank in the United States.  A correspondent bank is chosen by the customer’s bank to effect payment of money to the beneficiary bank.

Twenty-one minutes later, Ms A telephoned her bank to stop it, realising she had fallen victim to a scam. The staff member she spoke with erroneously thought she was talking about a direct debit and followed the process for that. 

He told Ms A the money would be back in her account the next day. It was then that the bank realised its error and filed a cancellation request for the international money transfer, but it was unsuccessful. The beneficiary who received the money wouldn’t return it.

Ms A complained to her bank about its poor service. She believed the payment wouldn’t have gone through if the bank had followed the correct process in the first place. She also complained about how the bank handled the matter after spotting the error, including that it had given her the impression it would reimburse her.

The bank wouldn’t reimburse Ms A because it had processed the international money transfer correctly and the beneficiary had already received the payment when she called the bank to cancel it. All it could do was file a cancellation request but this would only be successful if the beneficiary agreed to return the money. However, it offered $1,000 compensation to acknowledge the confusion it had caused.

Ms A declined the bank’s offer and asked us to investigate her complaint.  We were surprised the beneficiary received the payment so quickly and sought proof that the beneficiary had indeed received the payment by the time Ms A called the bank.

The bank then established that the payment had still been at the correspondent bank when Ms A had called her bank to cancel it. The correspondent bank sent the payment to the beneficiary’s Chinese bank around three hours after Ms A called her bank.

Ms A’s bank believed it was 50/50 whether the cancellation request would have succeeded if it had followed the correct payment-stopping process. It initially offered to reimburse half the international money transfer to reflect this. When Ms A declined the offer it then agreed to her wish to be reimbursed at least 75% of the transfer, in the interests of resolving the complaint. It paid her NZD4,200 in full and final settlement of her complaint.