A few days later, Tamara made a further payment of $100,000 to the same account, followed by two more payments of $100,000 to an account under a different name at a third bank.  

In February 2024, Tamara discovered she had been scammed. Her bank was unable to recover any of the money.  

Tamara complained that, at the time of the first transaction, her bank was aware that there had been fraudulent activity involving another of its accounts with the same name, and it had closed that account.   She said her mention of the same name during her call to the bank should have aroused its suspicions and prompted it to make inquiries about the transaction.  However, it failed to ask further questions or prevent the scam. She also complained that the bank should have sent a warning to other banks about accounts held in that name, so they could monitor or close them.  

Our investigation

Good banking practice requires banks to make inquiries about a transaction if they detect or ought to have detected the warning signs of a scam. In the absence of such warning signs, however, banks are not obliged to question any transaction but rather must carry out customers' instructions.

We did not consider Tamara’s call contained anything suggesting a real possibility of a scam. The $250,000 payment was unremarkable.  The bank was not obliged to ask the purpose of the payment or to explore the legitimacy of the company being paid.  There had been no media attention about the scam and no warnings issued by the Financial Markets Authority. The bank had closed down another fraudulent account operating under the same name, but the bank was not obliged to notify frontline staff – or other banks – to be on the alert for the use of this account name.  

Outcome

We did not uphold Tamara’s complaint. (Tamara’s claim had been above our financial limit of $500,000, but the bank agreed to us considering the complaint anyway.)