The Banking Ombudsman recently held that a customer who fell victim to a cryptocurrency scam was not entitled to be reimbursed $45,000 by her bank.

The customer made large deposits to a cryptocurrency platform over a period of five months totalling $45,000. The customer believed she was making legitimate investments, however, once she realised she was being scammed, she contacted her bank to request a reimbursement of the money she lost.

The customer’s bank declined to give her a reimbursement because the customer had authorised the transactions herself, and the bank proved that it had no reason to suspect the money was being “invested” into a scam.

The customer made a complaint to the Banking Ombudsman claiming that the bank failed in detecting that the payments she made were to an illegitimate platform.

The Ombudsman explained to the customer that the bank has no general duty to monitor a customer’s transactions.

The bank had an obligation to complete her payment instructions as they were authorised by the customer herself using her personal banking credentials. It is a customer’s responsibility to check the legitimacy of the recipient of the funds.

The Ombudsman also explained that sometimes a bank is under a duty to make appropriate enquiries regarding the validity of a payment request by a customer if they are suspicious that there is a chance the customer is being scammed.

In this case the bank did not breach their duty because they raised the possibility of the payments being fraudulent to the customer, and gave her an appropriate warning about scams.

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Alan Knowsley and Hanifa Kodirova