Torys bulletin quoted in National Post article exploring risks and complications of wire transfers

A Torys publication has been referenced in a National Post article discussing the common risks, challenges and complications associated with wire and e-transfers in Canada.

Wire transfer fraud is becoming increasingly common, whether it is conducted by impersonating an individual or hacking someone’s account to redirect an e-transfer. In other cases, however, Canadians have experienced that their money simply “goes missing,” not at the hands of a scammer but due to technical issues on the part of their financial institution.

In each of these instances, questions arise as to who bears responsibility for the financial loss: the individual or the financial institution.

The referenced Torys bulletin, authored by partners Julie Himo and Molly Reynolds; senior associate Nic Wall; and associate Mavra Choudhry, lays out how Canadian courts have previously ruled on liability in wire transfer fraud. It concludes that while the body of law around this type of fraud is evolving, Canadian courts determine liability based on which party is best positioned to prevent the losses.

The bulletin also underscores that financial institutions, in particular, should ensure their practices meet a reasonable standard of diligence. Courts have been fairly clear that if an organization or institution has the resources to detect and prevent fraud from occurring, but failed to do so, it will likely be found liable for the losses.

With this said, the extent of a bank’s duty to warn their clients about known fraud risks is also not fully settled, the bulletin points out, adding additional complications and considerations.

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