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If a bank intentionally causes a 'valid' bank transfer to be bounced back to the sender (and maybe also charges a fee for not receiving a required monthly deposit into the receiving account) has some law been broken?

  • For example, a government managed bank in the australasia region makes 1 bank transfer to a bank account at a separate bank in the european union each month, no problems for 10 years, and then suddenly 2 or 3 of these payments bounce back to the sending bank, the receiving bank tells the receiving account owner (their customer) that there is no type of block on their account and that no bank transfers were made, the only explanation is that the receiving bank is doing it intentionally/unprofessionally.
  • And as well as unprofessionally blocking the bank transfers, the receiving bank may charge some type of fee to the customer for not receiving the monthly deposit, since the monthly deposit is one of the requirements that the receiving bank asks of the customer in order to have the account.
  • I assume that the network used would be the SWIFT network
  • I'm not sure if this question should placed on a finance section of stackexchange.
phoog
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980980
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    Does the sender have evidence of specific behaviour that would be considered unprofessional? The trouble with "the only explanation" is that Hanlon's Razor suggests otherwise. – ItWasLikeThatWhenIGotHere Dec 12 '23 at 23:31
  • getting acount transaction-history to look for error-codes etc, is not easy – 980980 Dec 12 '23 at 23:40
  • FWIW, the legal analysis for a SWIFT network transfer is much more complicated than for a domestic wire transfer, because SWIFT transfers are always international, so there is a choice of law issue. Since SWIFT is based in Belgium, I presumed, but do not know, that the law of Belgium and the SWIFT co-op rules would apply. I do think that this is an appropriate SE to raise the question (although perhaps, not the only appropriate forum). – ohwilleke Dec 12 '23 at 23:46
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    The 'Quantitative Finance' SE seems to be for Finance proffessionals and academics, and the 'Personal Finance & Money' SE is for people who want to be financially literate – 980980 Dec 13 '23 at 00:07
  • If you want to know what the law says, this site is fine. But if this is a situation that is actually happening to you, and you want practical advice on how to correct it, go to [money.se] instead. Even if some law is being violated, your best course of action is almost certainly going to involve working with the customer service of one or both banks, not by going to court. – Nate Eldredge Dec 15 '23 at 17:20

1 Answers1

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Consumer C has an account with Bank B. That means C and B are in a contractual relationship. C agrees to pay certain fees, B agrees to provide certain services. If B intentionally fails to carry out services and intentionally gives the wrong explanation, then B is most likely guilty of fraud. There may also other banking oversight violations attached. Banking oversight also applies when a bank does not follow professional standards in their data handling.

Consumer C also has an account with the receiving bank R. C and R are also in a contractual relationship, C agrees to pay certain fees, R agrees to provide certain services (including accepting incoming deposits).

Now R claims that no attempt to send a deposit was made.

  • R could be wrong. This could be intentional deception, or internal processes at R are such that they do not know what happened. Intentional deception would be fraud, muddled processes would again be a case for banking regulators.
  • R could be right. Something changed which made some step in between reject the transaction, like repeated transfers which are individually below money laundering reporting levels, but cumulatively too high. Or improved validation of routing information.

However, B and R have most likely written their terms of service (which C agreed to) to allow the banks to update internal processes without item-by-item confirmation by C. For instance, I know a case where transfers to a mistyped account number worked for years, because the error was in the checksum bit and the checksum was not checked. Then one of the banks cleaned their processes and started to check the checksum, and suddenly the transfer would bounce. Other explanations might be increased money laundering requirements overall or any one of the involved entities becoming a matter of money laundering concerns.

o.m.
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  • This covers the easy part. In OPs example C wants B to do something which also involves third party bank A. C has no contractual relationship with A but their contract with B includes doing things like transferring money to third party A. It seems C got a response from B that essentially says 'we did our part, it failed somewhere at A, we have no clue' which is fairly unsatisfactory for C but I'm not sure what B's legal duties here are. – quarague Dec 14 '23 at 08:48
  • @quarague, I interpreted this as C having a beef with B, which is on second thoughts an incomplete reading. I'll expand. – o.m. Dec 14 '23 at 16:12
  • You wrote that C also has an account with the receiving bank R so there is a contractual relationship there as well. But for a money transfer you can easily have the situation where C has no relations with the bank R, the account there belongs to some other person that C wishes to transfer money to. Now the reason for the failure may be that R changed their internal procedures but I'm not sure how C is supposed to even know about that. – quarague Dec 14 '23 at 17:22
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    @quarague, I thought C was sending money to himself. But my point is that C cannot know. Complain to the banking oversight, without accusations of "intentionally" and asking if there is a systematic process problem or not. Or cut the losses and look for another bank. – o.m. Dec 14 '23 at 18:02