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BAFT Releases Fraud Indemnity Agreement Templates

by BAFT Admin | Oct 31, 2018
WASHINGTON — BAFT (Bankers Association for Finance & Trade), a global transaction banking association, today announced the release of fraud indemnity agreement templates for members attempting to recover funds that were fraudulently transferred from a customer’s bank account to another bank.

BAFT Releases Fraud Indemnity Agreement Templates

WASHINGTON — BAFT (Bankers Association for Finance & Trade), a global transaction banking association, today announced the release of fraud indemnity agreement templates for members attempting to recover funds that were fraudulently transferred from a customer’s bank account to another bank.

The templates are a product of an almost two-year effort by BAFT’s Payments Committee and Europe Council, and was led by Samantha Pelosi, BAFT’s Senior Vice President for Payments and Innovation.  Payments and legal experts from BAFT members serving on the Committee and Council and representatives from BAFT member banks in other regions contributed to the project, ensuring that the agreement terms would be effective and enforceable in all jurisdictions.  Banks may choose to use either the comprehensive or limited liability indemnity agreement template according to their needs.

Fraudsters are launching attacks on banks and their customers with increasing frequency and sophistication.  Often, a criminal posing as a bank customer will instruct the bank to send funds from the customer’s account to the criminal’s or a co-conspirator’s account at a bank abroad via an irreversible wire transfer. The criminal or co-conspirator will withdraw the funds from the receiving bank upon their deposit and disappear with the cash.

“In addition to working through law enforcement or a potentially lengthy chain of correspondents, banks needed a quick and effective method of thwarting theft through wire fraud,” said Pelosi. “These pre-negotiated agreements will be a critical tool for a bank seeking to incentivize its counterpart to act when time is of the essence.” 

Tod Burwell, president and CEO of BAFT added, “We anticipate this payment fraud indemnity agreement will be another valuable standard document offered by BAFT that can be used to facilitate transaction business with greater efficiency.”

BAFT members may access the fraud indemnity agreement templates and additional guidance on their use here

About BAFT

BAFT, the leading global financial services association for international transaction banking, helps bridge solutions across financial institutions, service providers and the regulatory community that promote sound financial practices enabling innovation, efficiency, and commercial growth. BAFT engages on a wide range of topics affecting transaction banking, including trade finance, payments, and compliance. The association website is www.baft.org.