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Imagine your bank account is credited with money that wasn’t intended for
you. Ethically, you should be reversing the transaction. But then, you may
choose not to….. for the right reason. Could there be a right reason? Well,
yes. If the law states, who has a say?
Now, let’s paint a picture for you. A global bank, acting as a loan agent,
accidentally transfers millions of dollars to its customer’s creditor. The
creditor refuses to repay the funds. To worsen the situation, the parties have
legal backing. But that’s not all. The fund that the bank has mistakenly paid
is from its own pockets. What a bummer! Now, which bank are we talking
about? The sophisticated, global Citibank. Interesting, right? Wait for the
deets.
On the face of it, the ruling looks unfair. Citibank also contends the same and
now intends to file an appeal. But what’s to say when the law has a different
rule in place? One that allows the lenders to keep the wrongly credited
money—LEGALLY (thankfully, only keep the funds and NOT spend).
The takeaway
Whether Citibank wins or loses its appeal, the accidental transfer should
teach banks a valuable and evergreen lesson. That is, banks should have
stringent internal controls to review transactions before they are approved.
Banks have a maker, checker, and approver process to validate a transaction
before it is completed.