Bulletin: NY000546

Date:
August 15, 2014
To:
All New York State Office Counsel, Managers and Agents
RE:
GENERAL – Wire Transfers

Please be aware that if there is an error in the account number on wiring instructions, banks may not be obligated to check further and the money may be deposited to the wrong account. One example is Regulation J (12 CFR 210), controlling payments involving Federal Reserve Banks, or involving Fedwire. Under 12 CFR 210.27 the beneficiary’s bank (the bank receiving the funds) may rely on the account number in the payment order, even if the owner of that account is different than the beneficiary named in the payment order. Further, the regulation states that a Federal Reserve Bank has no duty to detect any such inconsistency. In one recent case, one digit on the account number specified on the payment order was incorrect and the loan proceeds were deposited into the wrong account, even though the payment order clearly identified the correct intended recipient. The bank receiving the funds has relied on Regulation J to deny any responsibility for the error. While including the correct recipient’s name on the payment order is important, we suggest that you make all persons involved in processing wire transfer payment orders aware of the fact that the name on the order may not control where the funds will ultimately be deposited and that if there is any doubt regarding the account number it should be verified before initiating a wire transfer.

This bulletin is a reissue of Bulletin SLS2014009 issued by Stewart Title Guaranty Company on July 31, 2014.

If you have any questions please call 212-922-0050 and speak with any Agency Legal Services counsel.

THIS BULLETIN IS FURNISHED TO INFORM YOU OF CURRENT DEVELOPMENTS. AS A REMINDER, YOU ARE CHARGED WITH KNOWLEDGE OF THE CONTENT ON VIRTUAL UNDERWRITER  AS IT EXISTS FROM TIME TO TIME AS IT APPLIES TO YOU, AS WELL AS ANY OTHER INSTRUCTIONS. OUR UNDERWRITING AGREEMENTS DO NOT AUTHORIZE OUR ISSUING AGENTS TO ENGAGE IN SETTLEMENTS OR CLOSINGS ON BEHALF OF STEWART TITLE GUARANTY COMPANY. THIS BULLETIN IS NOT INTENDED TO DIRECT YOUR ESCROW OR SETTLEMENT PRACTICES OR TO CHANGE PROVISIONS OF APPLICABLE UNDERWRITING AGREEMENTS. CONFIDENTIAL, PROPRIETARY, OR NONPUBLIC PERSONAL INFORMATION SHOULD NEVER BE SHARED OR DISSEMINATED EXCEPT AS ALLOWED BY LAW. IF APPLICABLE STATE LAW OR REGULATION IMPOSES ADDITIONAL REQUIREMENTS, YOU SHOULD CONTINUE TO COMPLY WITH THOSE REQUIREMENTS.

References

Bulletins Replaced:
None
Related Bulletins:
SLS2014009 GENERAL - Wire Transfers
Underwriting Manual:
None
Exceptions Manual:
None
Forms:
None