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I was reading a news telling a fraud case of international payments. What happened was that the person was told to pay to an account, which IBAN and BIC was provided, however the beneficiary name was different from the account holders name; the account was used for fraud crime. I learned that most of the time the banks don't check the name mismatch, just process only by IBAN&BIC. What I am wondering is that doesn’t the receiving back has responsibility to check the account name and beneficiary name and pick up the discrepancy? Are there any legal basis that they are exempted from liability of crediting the different account from the beneficiary information on the payment instruction?

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  • "crediting the different account from the beneficiary information on the payment instruction" I suspect if you check the small print, then essentially, the IBAN/BIC (or, domestically, the sort-code/account-number) are "the payment instructions" and it is your responsibility to get these right. The account name (at least in the UK's internal system, BACS) is generally only looked at if there is a problem with the sort-code/account-number. – TripeHound Jul 30 '18 at 15:30
  • HI TripeHound, thank you for your reply. So when there is a difference in beneficiary name and account name, the bank ignores the discrepancy and refers only to the instruction of IBAN BIC, meaning those information are prioritized in terms of deciding a customer account? I find that very interesting... Are there any written information of this receiving bank’s responsibility or liability? – M W Jul 30 '18 at 15:57
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    It's a bit like addressing a letter to John Doe but giving the address for Bob Smith. The letter's going to be sent to Bob Smith's house, because that's where it's addressed. – Acccumulation Jul 30 '18 at 21:32
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    @MW Can't speak authoritatively for IBAN payments, but for UK domestic payments, if the sort-code/account number identify a real account, the computer applies the payment. If it doesn't then an exception is thrown and the account name may be looked at. The key is, it is the numbers that define the destination; the name is just "in case it is needed". – TripeHound Jul 31 '18 at 11:45
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Banks are not required to match the beneficiary name to the account number quoted in payment.

They just make a payment based on the account number/IBAN. Some banks do check the name if there is an issue with account number as exception process.

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  • As in any case of misdirected international payments, the case of Susan Madakor oios.un.org/resources/reports/a55_353.htm is instructive... – DJohnM Jul 30 '18 at 21:31
  • Wow. Just read that. - can I please open an account with one digit different from the IRS? – Aganju Jul 30 '18 at 21:53
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People are very inconsistent about what name they have on different accounts. If a bank tried to verify the name, it would be a huge hassle.

One customer might have originally opened an account with the name Jane Doe. She got married later and opened another account as Jane Smith with her husband. And then she may have a third account as Jane Smith-Doe. Another customer might have one account as Bob Smith, a second as Robert Smith, and a third as R.J. Smith. And the sender might know Jane or Robert by a different variation on either name. Trying to match the name would lead be non-trivial. Most likely, it would lead to lots of valid transactions being denied because the sender specified the name incorrectly, potentially causing a bunch of downstream impacts when your paycheck doesn't get deposited on time or your rent payment is rejected because you specified the recipient incorrectly.

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