MAS announces key initiatives to support the adoption of SORA. The initiatives aim to catalyse greater activity in SORA markets, safeguard integrity and enhance market confidence in SORA, given SORA’s growing importance as a key interest rate benchmark in SGD financial markets.
Reply to Parliamentary Question on Erroneous Transfers of Monies by Bank Customers
QUESTION NO 2851
NOTICE PAPER 1698 OF 2019
FOR WRITTEN ANSWER
Date: For Parliament Sitting on 2 September 2019
Name and Constituency of Member of Parliament
Er Dr Lee Bee Wah, MP, Nee Soon GRC
To ask the Prime Minister (a) whether there is an increasing number of cases of monies wrongly credited by a person to a bank account of an individual; and (b) whether our banks are required to freeze such monies and return them to the rightful sender and, if not, why.
Answer by Mr Tharman Shanmugaratnam, Senior Minister and Minister in charge of MAS:
1. With the growth in electronic funds transfers, there have been some reported cases where monies were transferred by bank customers to unintended recipients. This can happen when a person makes typographical errors while setting out the e-payment instructions, but such instances are rare.
2. When such an erroneous transfer occurs, the bank should help by engaging the recipient’s bank, so that the recipient is informed and a refund can be initiated. It is an offence under the Penal Code for the recipient to retain or use the funds when he has been informed that it was sent by mistake. If the wrongful recipient refuses to return the erroneously transferred monies, the sender should make a police report.
3. Er Dr Lee asked whether banks are required to freeze and automatically return monies to a sender when a sender says the monies were wrongly transferred. It would not be appropriate to impose such an automatic requirement on banks. First, a bank cannot be sure that the sender made a mistake. Second, automatically returning the monies to the sender will run the risk of abuse, and does not encourage more careful use of e-payment and transfers.
4. For example, a person who pays for an online purchase could subsequently ask his bank to reverse the payment upon receipt of the goods, claiming that the transaction was in error, and the banks are none the wiser.
5. To address the concerns relating to erroneous transfers, MAS has issued a set of guidelines to protect e-payments users. Under the guidelines, consumers will need to play their part and be responsible for accurate payments. On the banks’ part, they have to make reasonable efforts to assist the sender, as I have mentioned. And in the case of fraud, consumers should report to the Police promptly.
6. MAS will continue to work with the industry to raise consumer literacy and awareness on how to minimise wrongful e-payments. As in the case of cheques, the banks’ role is to ensure that all properly authenticated payment instructions are processed effectively and efficiently. And as customers, we all know we have to write our cheques accurately and properly.
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