Fraudulent transaction/Wrong bene name, correct IBAN&BIC.
I was reading a news telling a fraud case of international payments.
What happened was that the person was told to pay to an account, which IBAN and BIC was provided, however the beneficiary name was different from the account holders name; the account was used for fraud crime.
I learned that most of the time the banks don't check the name mismatch, just process only by IBAN&BIC.
What I am wondering is that doesn’t the receiving back has responsibility to check the account name and beneficiary name and pick up the discrepancy?
Are there any legal basis that they are exempted from liability of crediting the different account from the beneficiary information on the payment instruction?
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People are very inconsistent about what name they have on different accounts. If a bank tried to verify the name, it would be a huge hassle.
One customer might have originally opened an account with the name Jane Doe. She got married later and opened another account as Jane Smith with her husband. And then she may have a third account as Jane Smith-Doe. Another customer might have one account as Bob Smith, a second as Robert Smith, and a third as R.J. Smith. And the sender might know Jane or Robert by a different variation on either name. Trying to match the name would lead be non-trivial. Most likely, it would lead to lots of valid transactions being denied because the sender specified the name incorrectly, potentially causing a bunch of downstream impacts when your paycheck doesn't get deposited on time or your rent payment is rejected because you specified the recipient incorrectly.
Banks are not required to match the beneficiary name to the account number quoted in payment.
They just make a payment based on the account number/IBAN. Some banks do check the name if there is an issue with account number as exception process.
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