Ruling on Change of banking details fraud

The complainant lodged a complaint against the bank after a foreign payment of R1,072,895.45—intended for the complainant—was fraudulently diverted to a third-party account.

The complainant rendered services to an international client (the remitter). The remitter fell victim to a change of banking details scam through the interception of emails sent to the remitter and paid the funds into a fraudulent beneficiary account at the bank instead of the complainant’s account.

The complainant argued that the bank failed to conduct proper due diligence on the beneficiary account and failed to interrogate the nature of the foreign payment and the beneficiary business, which had only been recently opened and therefore was liable for the complainant’s loss.

The payment was for media/public relations work, while the beneficiary’s business was construction—suggesting a mismatch.

The NFO considered that because the funds were never paid into the complainant’s bank account, there was no bank–customer relationship between the bank and the complainant in respect of this transaction. The bank therefore did not owe the complainant a duty of care in the processing of the payment.

The complainant’s claim for loss should be directed to the remitter who was responsible to ensure the correctness of the account details before making payment and had fallen victim to the fraudulent misrepresentation which resulted in the payment being made.

The NFO also noted that the bank complied fully with:

FIC Act requirements for foreign transactions.
CEMAD (Currency and Exchanges Manual for Authorised Dealers) protocols.
Standard due-diligence checks for foreign receipts.

The bank verified:

Account name matching.
Account number matching.
Invoice number matching.
Remitter details matching.
The reason for receiving an international inward payment

No evidence suggested the bank should have suspected fraud based on the information provided.

Final Ruling

The complaint was dismissed. The NFO found that the bank acted correctly and complied with all regulatory obligations. The bank bore no liability for the loss and the complainant’s claim lay against the remitter who had not made payment its debt due to the complainant.

Contact details for the NFO:

Telephone: 0860-800-900