Does the receiving bank of a funds transfer have an obligation to verify both beneficiary name and account number when posting a wire? We have recalled a large wire that was sent to what we now suspect is a fictitious dealership. When we first inquired about the wire, we were told that the account number was valid. The bank is willing to work with us and return a portion of the funds but is requesting that we sign an indemnity agreement, which our counsel will not do. I'm wondering if they should be liable for the full amount if they had a duty to verify and did not take reasonable care?

"Does the receiving bank of a funds transfer have an obligation to verify both beneficiary name and account number when posting a wire?"

No

You sent the wire. When they accepted it, it was final.

"which our counsel will not do"

Why not, it is the only option to possibly recover any of the funds.

"Does the receiving bank of a funds transfer have an obligation to verify both beneficiary name and account number when posting a wire?"

not a requirement, many do, but many also post solely on account number.

"The bank is willing to work with us and return a portion of the funds but is requesting that we sign an indemnity agreement, which our counsel will not do."

Get new counsel, this is a standard practice when asking a bank to return a wire, or a portion, from a fraud claim. The agreement essentially protects them if their customer comes back saying "hey, where is my money" and they just point them in your direction.

"I'm wondering if they should be liable for the full amount if they had a duty to verify and did not take reasonable care?"

not as much duty as your bank being the originator and your customer who provided wiring instructions had, after all, the receiving bank did what you asked them to do, they credited the account the funds were wired to

Thanks, Randy and Happy! I actually looked a Reg J, hoping it would differ from the NACHA rules, but there it was...reliance on account numbers. I think we actually tipped off this bank to the fraud. As to bank counsel, well, he's my boss! I have already explained that it's industry practice; perhaps he'll change his mind.

perhaps you can phrase the request a different way...

"hey, boss, we can get back 80% of the funds if we fill this form out, we get back 0% if we don't. should I sign this, or will you? because when the customer sues us, I want to be able to show we did everything we could to get back as much as possible."