Nothing about transactions or use of mule account gave bank grounds for suspicion

Categories:

Fraud & scams, Bank accounts,

Summary:

On 16 and 19 January 2023, Enzo made internet banking payments totalling $270,000 to an organisation, supposedly to invest in corporate bonds. On 11 February, Enzo discovered it was a scam and contacted the bank to try to recover the money. It was able to retrieve just $9,995. Enzo said the scammer gave him a bank account number and told him to make the payments into that account. It was a mule account, that is, one operated by a third party for the benefit of the scammer. Enzo said the bank was partly responsible for his loss because it had been aware that someone was operating the account fraudulently as early as 3 February, when another bank emailed it to say one of its customers had been scammed into sending money to the same account.

Published:

February 2026

He said the bank had received this warning a full eight days before he reported the scam to the bank. He said the bank should have frozen the mule account immediately – if not sooner (on 24 January) when the Financial Markets Authority published a warning about the scam.

Our investigation

We learned that on the day of the 16 January transactions, Enzo had called the bank beforehand to ask about the daily transaction limit for internet banking. He said he had “a couple of hundred grand” that he was looking to transfer for “some investments”. During the call, the staff member asked whether the transfers would be within New Zealand and made via internet banking. Enzo said yes to both points, and the staff member replied that, in that case, there was no transaction limit. The call ended. Nothing about this interaction gave the bank any grounds, in our view, to suspect Enzo might be caught up in a scam. The bank duly processed the transactions, as it was required to do in the absence of any grounds to do otherwise.

On 3 February, when the bank received the warning about the mule account from the other bank, it immediately placed a hold on the account, which at that point contained $154,180, although only $4,160 of it was Enzo’s. The bank’s notes show that when Enzo phoned the bank on 11 February to say he had been scammed, it was already trying to recall his funds. The bank had thus begun recovery action at the first possible opportunity. Furthermore, up until 3 February, there was nothing about the operation of the account to suggest to the bank it was a mule account.

We could not fault the bank’s response to the Financial Markets Authority warning. This was because the warning contained no information that could have enabled the bank to link the mule account to the scam organisation referred to in the warning, also the mule account was operating under a different name. Also, the other bank’s email on 3 February showed the mule account had been used in more than one type of scam, meaning the bank could not have reasonably drawn a link between the Financial Market Authority’s warning about the scam organisation and the mule account.

The bank was able to recover $5,835 from overseas, and this amount, added to the $4,160 recovered from the mule account, brought the total recovered funds to $9,995.