Can Malaysian banks help if you’ve transferred money to the wrong account?

You’re on your usual online banking platform, managing your money as usual, making a few transfers. You’re so used to it, you’re on autopilot and just want to get it over with. But as you complete that last transaction, you find yourself staring blankly at the screen for a few moments.

The realization slowly dawns upon you that you’ve just made a huge mistake. You made that last money transfer to the wrong account number…

OH S**T…

What can you do now…?

You can’t exactly invalidate that transaction because:

1. You don’t have a contract with that account holder which could protect your rights

2. You transferred the money of your own free will

A simple, yet endlessly frustrating situation. We don’t currently have the option to undo transactions with major banks, and by transferring that money, it’s no longer in your name, and therefore also out of your control.

You have 2 options here:

1. Get your bank to help ask the account holder to return the money

No one wants to lose their money to a silly mistake like keying in the wrong account number. Bank numbers aren’t given out sequentially, so you will almost never get someone else’s account if you mistyped one number. But if it actually happens, talk to your bank and get their help contacting the account holder.

Unfortunately, you will need the account holder’s consent to reverse the transaction because technically speaking, it’s now under their name - the bank can’t simply force transfer it back if the money has reached their account. Now, you still rightfully own the money, which is highlighted in the next header, but the the bank doesn’t have the power to enforce this right for you for legal reasons.

As for what you need to do, the procedures can vary from bank to bank, and you might need to lodge a police report depending on what needs to be done. CIMB bank in particular has advised customers before to get a police report for them to facilitate the correction.

2. Get a lawyer to help you retrieve the money

If for one reason or another the previous method doesn’t work, you may have to get a lawyer’s help. You’ll be invoking an area of law called trust law.

There’s a legal protection called a “constructive trust” that takes effect under a weird “separate but not really separate” area of law called equity. In very basic terms, the law recognizes that the legal ownership of the money may have passed to the person you mistakenly transferred to, but the beneficial ownership of the money still remains with you. Beneficial ownership is like the right to benefit from that thing you own, and it didn’t transfer because you didn’t intend for the other person to get your money.

This beneficial ownership is the very reason why you have a right to reclaim your money in the first place. So while when you reclaim your money, the other account holder can freely consent, you still have a right to sue that person under constructive trust to get your money back.

The thing is, suing someone is expensive to the point you’ll probably lose less money if you just let it go, so firstly, you only want to engage a lawyer if you’re having trouble getting the money back, and secondly, you’ll still want to get your lawyer to convince the other guy to settle privately before considering escalating to a full-blown lawsuit.

Triple check when you’re transferring money!

All this is really just extra trouble and as the saying goes: prevention is better than cure. It’s best to be extra careful when transferring money by checking the account number, the name that appears, and if you need to, use the verification methods provided by most banking platforms before confirming the transfer.