Financial institutions are obliged to exercise due diligence in their transactions with private individuals.
\nIf a sum of money is paid out to a third party who fails to present valid legal authorization to the bank for the purpose of withdrawal, the bank is required to compensate the rightful beneficiary of the funds.<\/p>\n
The Supreme Civil and Criminal Court of Greece (Areios Pagos), in Decision No. 71\/2022, upheld the ruling that the bank must return the funds to the actual beneficiary when it has disbursed the amount to a third party lacking valid authorization.<\/p>\n
A deposit in a bank, the primary purpose of which is the secure custody of the depositor\u2019s funds, is legally characterized as an irregular deposit. The bank obtains the right to use the funds, and therefore, under Article 830 of the Greek Civil Code, the provisions of both Article 806, under which the bank becomes the owner of the deposited funds, and Article 827, which stipulates that the custodian must return the item if the depositor demands it (even before the agreed term has expired), are applicable.<\/p>\n
The bank\u2019s liability for intentional misconduct or gross negligence by its employees cannot be waived by agreement with the depositor. The bank remains responsible for the actions of its staff.
\nGross negligence on the part of the bank occurs, for example, when its employees\u2014who issued the payment order for the withdrawn amount\u2014failed to verify the identity of the person making the withdrawal or failed to confirm the validity of the authorization, particularly if the presented power of attorney:<\/p>\n
…indicating carelessness in protecting the client\u2019s interests.<\/p>\n
Therefore, if a third party presents an authorization that, for instance, lacks complete information about the grantor, the date of issuance, or certification of signature, the bank is obliged to carry out further checks to confirm its validity. This includes contacting the rightful account holder to ensure the safety of the transaction.<\/p>\n
If the bank fails to perform such checks diligently, it is liable to compensate the rightful beneficiary for the amount paid to the third party.<\/p>\n
In such a case, the contractual claim of the depositor against the bank remains intact, stemming from their irregular deposit agreement.
\nIt is a separate issue, however, that the bank\u2014as owner of the deposited funds and suffering loss due to the third party\u2019s tortious conduct\u2014has the right to seek equivalent<\/p>\n","protected":false},"excerpt":{"rendered":"
Financial institutions are obliged to exercise due diligence in their transactions with private individuals. If a sum of money is paid out to a third party who fails to present valid legal authorization to the bank for the purpose of withdrawal, the bank is required to compensate the rightful beneficiary of the funds. The Supreme<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"pgc_meta":"","footnotes":""},"categories":[526],"tags":[],"class_list":["post-5642","post","type-post","status-publish","format-standard","hentry","category-legal-issues-for-individuals"],"rttpg_featured_image_url":null,"rttpg_author":{"display_name":"spiliopouloslaw","author_link":"https:\/\/www.spiliopouloslaw.com\/en\/author\/root2christos\/"},"rttpg_comment":0,"rttpg_category":"Legal Issues for Individuals<\/a>","rttpg_excerpt":"Financial institutions are obliged to exercise due diligence in their transactions with private individuals. If a sum of money is paid out to a third party who fails to present valid legal authorization to the bank for the purpose of withdrawal, the bank is required to compensate the rightful beneficiary of the funds. The Supreme","_links":{"self":[{"href":"https:\/\/www.spiliopouloslaw.com\/en\/wp-json\/wp\/v2\/posts\/5642","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.spiliopouloslaw.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.spiliopouloslaw.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.spiliopouloslaw.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.spiliopouloslaw.com\/en\/wp-json\/wp\/v2\/comments?post=5642"}],"version-history":[{"count":0,"href":"https:\/\/www.spiliopouloslaw.com\/en\/wp-json\/wp\/v2\/posts\/5642\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.spiliopouloslaw.com\/en\/wp-json\/wp\/v2\/media?parent=5642"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.spiliopouloslaw.com\/en\/wp-json\/wp\/v2\/categories?post=5642"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.spiliopouloslaw.com\/en\/wp-json\/wp\/v2\/tags?post=5642"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}