Absent Actual Knowledge Of An Inconsistency, Banks May Rely On Account Number Specified On An Incoming Wire Transfer
If wire transfer instructions designate a valid account number, but an incorrect beneficiary, may the bank that accepts the incoming wire rely upon the account number?
Yes, assuming the bank did not have actual knowledge of that inconsistency. So said the court of appeal in Los Angeles in TME Enterprises, Inc. v. Norwest Corporation, 04 C.D.O.S. 10834 (December 9, 2004).
In this case, the plaintiffs were victims of a fraudulent investment scheme and sent funds by wire transfer to an account at the defendant bank. The wire transfer instructions included a valid account number but incorrectly designated the account name (as a trust account). The bank processed the wire transfer manually but had no actual knowledge of the inconsistency.
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