Commercial Division Blog
Once Wire Transfer Request is Accepted, Funds Become Property of the Beneficiary
On November 15, 2016, the First Department issued a decision in Bayerische Hypo-Und Vereinsbank AG v. HSBC Bank USA, N.A., 2016 NY Slip Op. 07603, holding that once a wire transfer request is accepted, the funds become the property of the beneficiary and are subject to attachment, explaining:
Because the mistaken payment at issue was effected by wire transfer, this action is governed by UCC article 4-A. While plaintiff is correct that, to the extent a particular claim as to a wire transfer does not contravene or alter the rights and obligations created under article 4-A, a common-law claim may be asserted, this is not such a case. Plaintiff's attempt to cancel the payment order is directly governed by UCC 4-A-211(1), which provides that, where, as here, a payment order has been accepted, a communication cancelling it is not effective without the agreement of the receiving bank, here, defendant HSBC Bank USA. Further, once the order was accepted, the funds became the property of the beneficiary, here, intervenor-defendant (TIBC), and it was permissible for HSBC to set off the overdraft owed to it by TIBC against the funds. Similarly, because title had passed to TIBC, TIBC's other creditors were then able to attach the funds.
(Internal quotations and citations omitted).