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Account opened for overseas resident – bank lost records – account later closed – failure to identify customer – reliance on faulty documentation
This interesting case included poor banking practice, the theft of funds, and a complainant living on the other side of the world, with all the problems associated with time zones and language barriers.
Mrs B had intended to emigrate with her family from a Baltic state to New Zealand, and used an agency based in another Baltic state to assist with her application. In May 2003, in anticipation of her emigration, a New Zealand bank account was opened by the agency on her behalf. Later that month Mrs B’s agency transferred NZ$57,007.78 directly into her New Zealand account. Two months later she gave the agency a further 65,000 euros in cash to deposit in the New Zealand account, although it appears that only about one sixth of this amount was actually deposited.
Unfortunately for Mrs B, her application for New Zealand residency was declined. She subsequently contacted the New Zealand bank, requesting it to transfer her funds back to her country of origin.
The bank replied that her New Zealand account had been closed, with the funds having been forwarded at her request to a bank account in the Baltic state where her agency was based. The funds had been forwarded to a company account sounding similar to the account from which she had made her original transfer to New Zealand.
Mrs B complained that she had authorised neither the transfer of funds nor the closure of her New Zealand account. Furthermore, she had not received any of the transferred funds. She was not satisfied with the bank’s response to her complaint, and complained formally to my office.
My investigation into Mrs B’s complaint revealed both that the bank had made some errors and that the emigration agency had apparently misappropriated some of her funds.
From the outset the bank had not followed good banking practice. Because Mrs B had not entered New Zealand, the bank account must have been opened on her behalf by a third party. There was no record of who opened her account, and the bank had mislaid all documentation relating to this.
The address for the account was a New Zealand address, and was therefore not Mrs B’s residential address at the time.
The bank had received a letter dated 12 November 2003, supposedly from Mrs B, requesting the closure of her account and the transfer of funds to an account in the Baltic state where her agency was based. A close examination showed that the letter, which had been notarised, was dated 12 November 2003 – while the notarisation was dated two months previously – 12 October 2003. This would mean that the letter was notarised two months before it was written – an impossibility. Although the discrepancy in dates could conceivably have been a simple typing error, it should have been detected by the bank. Payment of the funds should have been deferred until a new notarised letter had been received.
I found that the bank had failed to identify its customer properly when opening her account, and later accepted a deficient instruction to close the account and transfer the funds out of New Zealand. On this basis I recommended that the bank should refund the amount transferred out of the account, and should also reimburse some of Mrs B’s costs. She should also receive compensation for the inconvenience she had suffered. The bank and Mrs B accepted the settlement I had recommended, with the bank paying her compensation in excess of $80,000.