A client has recently paid a payment to China for an order however the e-mail system was hacked and the bank details were changed and the International T.T payment was sent to the hackers bank account. The bank have refused to repay the payment. This is now a loss to the business but how do I account for it please?
Well first of all I hope the amount is not too large. I think as far as accounting for it I would be tempted to set up a new nominal code and name it something along the lines of 'stolen money'. Keep all related paperwork, letters from bank and other organisations so you can corroborate the debit should HMRC wish to investigate at any time.
Thanks for your reply RobH.
The amount was £6250.00. It is a massive blow to the business. The TT payment left the clients account at 8:42am and it was brought to light at 12:30pm that it was fraudulent and the bank was instantly alerted yet the bank took 50 hours to put a recall on the transaction then when it reached the Chinese bank the bank refused to return it.
Having worked for a large national Bank at Corporate level whenever we received a request for payment that wasnt formally in writing (ie original letter with original signatures) then we had to progress matters via a strict call back system and could only countersign the instruction to be processed under very strictly adhered to guidelines, which were signed off by more than one person. I would NEVER accept an instruction to pay something via email - the very least was a fax with appropriate signatures per the Bank mandate and then, in the main, if an indemnity was in place to accept payments in such a manner. Very rarely on the back of a phone call (eg to cover software failure/non payment of wages and the Director was stuck up on a mountain on his skiing holiday) If there was no indemnity additional security measures were carried out.
Would be interested to know 1) Which Bank this is? Shocked at their lack of internal controls! 2) How you know it took 50 hours for the Bank to put in a recall? 3) Had it ACTUALLY left the Bank account at 8.42 or was it just in the system and was the payment actually capable of being 'recalled' (not all payments are and so the 'recall' you mention could well have been a courtesy message to the Chinese Bank abroad to return the money - The UK Bank doesnt have any control over this)? 4) How far have you taken this with the Bank - has it been reported as a fraud?
Whilst I have every sympathy with you the customer I also wonder why the Bank should repay it if the Bank wasnt guilty of the actual fraud, and therefore I dont think the Bank should pay out willy nilly, BUT if the Bank acted negligently then thats a different kettle of fish!
Moral of the story - never sent such instructions by email. Maybe have another go at trying to get the cash back. Report it to the UK police (they dont always act - short of policemen/cash yadda yadda, but if this is a known fraud they may do). Hope you get some good luck on this one!
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
