Bank unhelpful to municipality on $500K fraud

Scote64 wrote: ↑ We've heard many reports of how unhelpful and frustrating the Canadian banks are on cases of fraud affecting individuals. But it's not just individuals. In a case reported by CBC today, it was a municipality defrauded of almost $500K when Scotiabank allowed a transfer to the frozen account of a known fraudster, and then dragged their feet on giving the money back. The municipality eventually got it back, but they're suing the bank.
https://www.cbc.ca/news/canada/nova-sco ... -1.6380205

doesn't seem like it's bank fault at all..who initiated and approved the payment? the municipality

if anything, municipality should be held to higher standards than falling for such frauds..i mean the town made a payment and chose the account to pay into and amount.

StatsGuy wrote: ↑ doesn't seem like it's bank fault at all..who initiated and approved the payment? the municipality

That's not the point.

The point is that the banks should be more responsive and helpful in cases of fraud. The bank has a legal responsibility to "know their customer". How many times have we heard in cases of fraud that the bank knows it's fraud, knows where the money went, but is unhelpful to the victim in tracing the money and getting it back.

Actually, the article mentioned..."BMO in Bridgewater — the bank that handles the municipality's finances — asked the town's accounts payable clerk to check whether the $490,930.43 transfer was legitimate after being tipped off by Scotiabank"

DealMarker wrote: ↑ Actually, the article mentioned..."BMO in Bridgewater — the bank that handles the municipality's finances — asked the town's accounts payable clerk to check whether the $490,930.43 transfer was legitimate after being tipped off by Scotiabank"

... which accepted the money and held onto it even though they knew it was fraud, and both banks then dragged their feet on getting the money back - hence the lawsuit.

Scote64 wrote: ↑ ... which accepted the money and held onto it even though they knew it was fraud, and both banks then dragged their feet on getting the money back - hence the lawsuit.

As per account holder's instruction...

StatsGuy wrote: ↑ doesn't seem like it's bank fault at all..who initiated and approved the payment? the municipality

if anything, municipality should be held to higher standards than falling for such frauds..i mean the town made a payment and chose the account to pay into and amount.

DealMarker wrote: ↑ Actually, the article mentioned..."BMO in Bridgewater — the bank that handles the municipality's finances — asked the town's accounts payable clerk to check whether the $490,930.43 transfer was legitimate after being tipped off by Scotiabank"

Exactly.

No libability insurance brought by the minipicpy?

>> when Scotiabank allowed a transfer to the frozen account

Why do you think they shouldn't have allowed that? Banks often freeze accounts just for suspicious activity that is later resolved. What if they froze your account cause they detected somebody trying to hack in - would you want them to also stop depositing your pay cheques or tax refunds?

Banks aren't legal entities, they can't judge and convict somebody of being a "fraudster" by themselves and then start deciding they can block or reverse legitimately made transactions. That's why they had to "tip off" the municipality instead of taking unilateral action by themselves. If they start fancying themselves law enforcement it won't be long till somebody sues them for blocking transactions they mistook for "suspicious".

It's only money.

DealMarker wrote: ↑ As per account holder's instruction...

Also, "frozen" account generally means no withdrawals, transfers from, or other debits - BUT - can still accept incoming funds.

I feel this part is funny

"The mayor replied that he expected there would be a way of getting the money back.

"I hope staff are OK and nobody is feeling like this is their fault," he wrote. "It sucks but nobody did this intentionally and it's only money. Nobody was hurt."

I guess it's always others' fault. I am wondering whether someone in administration should be responsible and accountable for this.