Third party liability: the risk of being sued by those damaged by regulatory or enforcement action

Raises the problem for a bank asked by a third party to freeze the funds of a customer, with special reference to New Zealand; the bank faces liability whichever decision it makes. Mentions the Royal Brunei Airlines and Twinsectra cases, and details a case study (US International Marketing Ltd v National Bank of New Zealand) where the bank refused to transfer a customer’s funds because of a third party request; the customer’s appeal was upheld. Concludes that banks must have “sufficient factual foundation” before they can refuse to comply with a customer’s request for a transfer of funds.