A UK Bank suspecting fraud in an automated payment transfer cannot send the money back after several days

In the case before him, Colman J said the Case "raised issues of great importance in relation to the operation of CHAPS, an automated electronic transfer system allowing high value payments to clear on the same day they are made."

The case, Tayeb v HSBC (2004), concerned a Tunisian national, Tayeb, who sold a database of internet names to a Libyan Telecommunications company, GPTC. Tayeb opened an HSBC savings account to hold the monies from the sale. On 23 September 2000, GPTC initiated a CHAPS transfer of US$1.5m to Tayeb's HSBC account. Assuming correctly that the CHAPS transfer had been credited to his account, Tayeb completed the sale of his database on that day. HSBC became suspicious of this money transfer transaction and several days later transferred the CHAPS funds back to GPTC.

Tayeb was unable to reclaim the sum from GPTC, and claimed against the bank in respect of the money transferred. The primary issue was whether the credit of the sum to the claimant's account created a debt due from HSBC to Tayeb or whether HSBC was still in sufficient control of the funds to be entitled to transfer them back to GPTC several days after initial receipt.

HSBC argued that it would have committed an offence under the Criminal Justice Act 1988 if it received or retained in account money about which it was suspicious, and nothing in the CHAPS system required it to accept money about which there was a genuine suspicion.

The Judge said that an offence under the Act "would not be committed merely by accepting a transfer suspecting that it emanated from a fraud or other unlawfulness or that it was part of a money laundering operation, provided that the reporting procedures (under the money laundering regime) were implemented by the bank." The notion that a bank retained an "overriding discretion to reverse a transfer" was "fundamentally inconsistent with the bases of the contract with its customer and with CHAPS rules and would go well beyond what was reasonably required."

One of our colleagues provided expert witness evidence of a very technical nature in this high profile case. By ordering HSBC to repay the debt, the judge ensured the future of the CHAPS system as an unconditional and irrevocable same day electronic money transfer system within the UK banking system.

Money laundering Issues

Several of our colleagues have been engaged to provide expert witness evidence in a variety of high profile money laundering cases, and one of our members is acknowledged as a specialist in providing expert evidence specifically relating to the "Hawala" money transfer system.

This evidence may take the form of explanations to Court about the history, development, and procedures of this very old money transfer system, as well as relating these Hawala traditions to the present UK banking procedures and operations.

We are receiving an increasing number of enquiries from individuals and businesses that are becoming accused of potential money laundering issues, some of which are linked to the Hawala principles.

Acceptance of fake Bankers Drafts/incorrectly negotiated cheques

We have trained expert witnesses who are able to advise business people or individuals suffering potential losses in a variety of banking transactions.

Recent examples of where we have supported claimants in negotiating successful outcomes with their bankers, include the acceptance and subsequent return of fake bankers drafts, as well as the fraudulent encashment through other bank accounts of cheques thought to have been lost in the post.

More about our banking expert witness work

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