Extra information sought about address reasonable

Categories:
Anti-money laundering - changes to banking
Summary:
Jackie wanted to transfer funds from her overseas account to her New Zealand bank account. She asked her New Zealand bank for its SWIFT code, the bank’s unique identification code needed for international transfers. The bank provided the code, and also told her what information she would need to make the payment. Two days later, the Anti-Money Laundering and Countering the Financing of Terrorism Act 2009 came into effect.

The bank did not tell Jackie about the extra information she would have to provide under the Act. Jackie transferred funds to her New Zealand bank, but they did not appear in her account and she contacted the bank.

After a short delay the bank said the payment was delayed because it did not meet the Act's verification requirements. It noted that she had not provided her physical address overseas, and that a post office box number was insufficient. It offered Jackie a temporary overdraft while it took further steps to verify the transfer complied with the Act.

The overdraft funds were released a week after she initiated the transfer.

Jackie complained to the bank that it had been excessive in applying the Act and requiring her physical address given she was already known to the bank. She also complained she had received poor service. She felt the bank should have advised the legislation was about to change when she initially contacted it, and was unhappy with the delay in the bank’s response to her queries after she had made the transfer. The bank offered her $500 to settle the complaint.  However, she did not accept this and asked us to investigate.

Our investigation

We considered it was reasonable for a bank to take further steps to verify a transfer if a customer – even one already known to the bank – did not give a physical address. Although a risk-averse approach, it was reasonable and in compliance with the Act.

However, the bank had taken longer than usual to respond to her queries, partly because of the introduction of the Act. While inconvenient, this delay was ultimately constructive and not unreasonable. 

The bank could have warned Jackie at the outset that it would have to require more information of her, but this failure did not reach the threshold for recommending compensation. 

Outcome

Jackie accepted the bank's offer of $500 in compensation.

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