December 23, 2023

A woman who lost $200,000 to an international investment scam has turned down an offer of $1500 in compensation from her bank.

The woman sent $230,000 to overseas accounts in the course of the scam, of which the bank managed to recover $30,000.

She argued that it should reimburse her for the rest because it had breached the duty of care it owed her to protect her financial interests and was also in breach of the anti-money laundering laws.

She complained to the Banking Ombudsman, who said that a duty of care was usually in place in relationships of trust and confidence, such as between a patient and doctor or lawyer and client, but it did not normally apply to banking.

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“The bank didn’t owe [her] a fiduciary duty, but it did owe her an obligation to act with reasonable skill and care,” it said.

“We thought the bank had complied with this obligation because it correctly followed her instructions to transfer the funds, it complied with industry practice by requiring two-factor authentication to ensure it was actually [the customer] making the payment and there were no warning signs (red flags) to alert the bank to the fact [she] was involved in a scam.”

The customer argued that the bank had broken anti-money laundering laws by not…

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