A Herald investigation revealed that an ANZ call centre worker helped a woman transfer $250,000 to the BNZ account of a known “money mule”.
The Banking Ombudsman has released its decision after staff at the country’s biggest bank helped a customer send $250,000 to scammers.
Kate* lost $550,000 in July 2023 after being tricked by a complex investment scam perpetrated by international fraudsters.
A Herald investigation revealed that an ANZ call centre worker helped Kate transfer an initial payment of $250,000 to the BNZ account of a known “money mule” – CADT Holdings.
The payment came just weeks after another scam victim lost $250,000 to an ANZ account under the same name.
It’s believed the account owner is based overseas and none of the money was ever recovered.
Kate said she was shocked to learn ANZ was on notice about the suspect mule account but still processed her money transfer on July 21, 2023.
She felt ANZ was negligent and should shoulder some responsibility for her loss.
The Herald obtained audio of the phone call with ANZ. Experts criticised the bank’s lack of due diligence during the call, given the amount of money that was at stake – with one describing the situation as “appalling on every level”.
Following Herald inquiries, ANZ agreed to review its handling of Kate’s case, but later ruled it had not contributed to her loss and was simply acting on her instructions.
It confirmed it did not check account names for those of suspected mules – only account numbers.
Kate then complained to the Banking Ombudsman, arguing ANZ had failed to carry out adequate security checks, failed to alert other banks to the fraudulent account name and failed to warn her about the possibility of a scam.
However, in a decision obtained by the Herald, Banking Ombudsman Nicola Sladden ruled in ANZ’s favour.
The decision says Kate complained that ANZ was alert to the name CADT Holdings because it had already closed an account in that name after being advised of fraudulent activity.
“She says that if ANZ had put a red flag on that account name, this would have prevented the scam,” Sladden said.
Kate also believed ANZ should have warned other banks about the mule account, so BNZ could have closed its account, preventing her funds from being lost.
Sladden said banks had a strict duty to follow customers’ instructions but must act with “reasonable skill and care” and make inquiries if they detected warning signs of suspicious activity.
“In the absence of such warning signs, however, a bank is not obliged to question any transaction to protect a customer from scams or fraud.
“In short, the customer, not the bank, is responsible for checking that the money is going to the intended recipient and that the recipient is legitimate.”
Sladden ruled that despite Kate reading out the name of the mule account to the ANZ staff member, this did not amount to the bank being on notice that the customer was being scammed.
“Once the bank was on notice of fraudulent activity in an ANZ account in the name of CADT Holdings, it had obligations to respond appropriately. However, these obligations did not extend to advising frontline staff of the account name.”
Sladden ruled that ANZ acted in accordance with internal policy, which was consistent with its duty to act with reasonable skill and care.
She further ruled the bank was not obliged to ask about the purpose of Kate’s payment or explore the legitimacy of the company being paid.
Kate’s subsequent payments totalling $300,000 were made via internet banking. ANZ’s fraud detection systems did not identify them as suspicious, Sladden said.
“In the absence of any legislative or regulatory framework, or obligation to monitor transactions to detect scams, we cannot compel banks to have certain fraud detection systems, such as a system that would have detected ‘CADT Holdings’ in the account payee field.”
Sladden found that due to confidentiality and privacy rules, ANZ was not obliged to warn other banks about the suspect account, and “cannot be responsible for accounts in that name still being open at other banks”.
“We find that the bank breached no obligation to [Kate] and is therefore not liable for her loss.”
Kate told the Herald she felt the Ombudsman process was a “waste of time”.
“Other people have gone to the Ombudsman and had no luck. Their hands are tied and they just say the banks are not at fault.
“It’s just a waste of time and emotional energy to keep remembering you’ve lost over half a million.”
Kate said the rules were stacked against scam victims “and until that changes, nothing’s going to happen”.
An ANZ spokesman said the bank sympathised with Kate.
“We note the finding from the Banking Ombudsman Scheme that ANZ NZ breached no obligation to [Kate] and is therefore not liable for her loss.”
ANZ was working with the wider industry to implement more measures to protect Kiwis from scams and make New Zealand a “tough target for criminals”.
“This includes being part of the New Zealand Anti-Scam Alliance – a joint initiative between Government, industry and consumer groups aimed at tackling scams with a co-ordinated and collaborative approach.”
*Name changed to protect victim’s identity.
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