A recent Court of Appeal decision in the UK highlights the increasing obligations on banks to not only verify who is giving them instructions in respect to a particular account, but also review the nature of those instructions. Banks may not be able to defend their actions by simply saying they acted on the authority of the signatories of the account.
Case Summary: Fiona Lorraine Philipp vs Barclays Bank UK PLC EWCA Civ 318 
In March 2018, Dr, and Mrs. Philipp were fraudulently misled into transferring their lifesavings into a foreign account held in the United Arab Emirates (UAE). The duo were victims of an Authorized Push Payment (APP) fraud, which occurs when a customer is manipulated into directing their bank to transfer their funds into a fraudster’s account. A fraudster known as JW deceived the couple, over a period of time, into believing that they were assisting in an investigation by the Financial Conduct Authority and the National Crime Agency. As a result of this fraud, they moved over GDP 700,000 (approx. USD 920,000) of their savings held jointly into an account in Mrs. Philipp’s name with the respondent bank, Barclays Bank. Despite a police officer warning Mrs. Philipp about the potential for fraud she instructed the bank to transfer the money, in two payments of GDP 400,000 (approx. USD 520,000) and GDP 300,000 (approx. USD 390,000), to separate bank accounts in the UAE under the belief that she was moving the money into safe accounts to protect it from fraud. Mrs. Philipp brought a claim against Barclays Bank for breach of its duty of care in effecting the transfer of funds.
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