Florida Senate - 2024 SB 772 By Senator Rouson 16-00565A-24 2024772__ 1 A bill to be entitled 2 An act relating to misdescription of beneficiaries and 3 banks; amending s. 670.207, F.S.; revising 4 requirements for rights as a beneficiary of a payment 5 order and acceptance of the order when the beneficiary 6 is a nonexistent or unidentifiable person or account; 7 removing rules relating to accepted payment orders; 8 amending s. 670.208, F.S.; revising requirements 9 relating to the misdescription of banks for 10 intermediaries and beneficiaries; providing an 11 effective date. 12 13 Be It Enacted by the Legislature of the State of Florida: 14 15 Section 1.Section 670.207, Florida Statutes, is amended to 16 read: 17 670.207Misdescription of beneficiary. 18 (1)(a)Subject to subsection (2), if, in a payment order 19 received by the beneficiarys bank, the name, bank account 20 number, or other identification of the beneficiary refers to a 21 nonexistent or unidentifiable person or account, no person has 22 rights as a beneficiary of the order and acceptance of the order 23 cannot occur. 24 (b)(2)If A payment order received by the beneficiarys 25 bank must identify identifies the beneficiary both by name and 26 by an identifying or bank account number. If and the name and 27 number identify different persons, no person has rights as a the 28 following rules apply: 29 (a)Except as otherwise provided in subsection (3), if the 30 beneficiarys bank does not know that the name and number refer 31 to different persons, it may rely on the number as the proper 32 identification of the beneficiary of the order and acceptance of 33 the order cannot occur. 34 (2)(a)The beneficiarys bank must need not determine in 35 good faith, and using reasonable care, whether the name and 36 number refer to the same person. The duty of reasonable care 37 must include, at a minimum, an automated system for name and 38 number match which escalates any transaction with any 39 discrepancy to a human reviewer. 40 (b)If the bank cannot reasonably verify beneficiarys bank 41 pays the person identified by name or knows that the name and 42 number refer to the same person identify different persons, no 43 person has rights as beneficiary except the person paid by the 44 beneficiarys bank if that person was entitled to receive 45 payment from the originator of the funds transfer. If no person 46 has rights as beneficiary, acceptance of the order cannot occur 47 until the bank has verified with the originator or the receiving 48 bank that the payment order should be processed and any 49 discrepancy is corrected. 50 (3)If a payment order described in subsection (2) is 51 accepted, the originators payment order described the 52 beneficiary inconsistently by name and number, and the 53 beneficiarys bank pays any person whom the originator did not 54 intend to pay, then the originator is not obliged to pay its 55 order, unless the originator was grossly negligent in sending 56 the original instructions, and the beneficiarys bank was 57 diligent in ascertaining whether the number and name referred to 58 the same person. the person identified by number as permitted by 59 paragraph (2)(a), the following rules apply: 60 (a)If the originator is a bank, the originator is obliged 61 to pay its order. 62 (b)If the originator is not a bank and proves that the 63 person identified by number was not entitled to receive payment 64 from the originator, the originator is not obliged to pay its 65 order unless the originators bank proves that the originator, 66 before acceptance of the originators order, had notice that 67 payment of a payment order issued by the originator might be 68 made by the beneficiarys bank on the basis of an identifying or 69 bank account number even if it identifies a person different 70 from the named beneficiary. Proof of notice may be made by any 71 admissible evidence. The originators bank satisfies the burden 72 of proof if it proves that the originator, before the payment 73 order was accepted, signed a writing stating the information to 74 which the notice relates. 75 (4)In a case governed by paragraph (2)(a), If the 76 beneficiarys bank improperly rightfully pays any the person 77 identified by number and that person was not entitled or 78 intended to receive payment from the originator, the amount paid 79 may be recovered from that person to the extent allowed by the 80 law governing mistake and restitution. as follows: 81 (a)If the originator is obliged to pay its payment order 82 due to gross negligence as stated in subsection (3), the 83 originator has the right to recover. Otherwise, the bank that 84 has borne the loss of the order has the right to recover. 85 (b)If the originator is not a bank and is not obliged to 86 pay its payment order, the originators bank has the right to 87 recover. 88 (5)(a)A bank accepting orders at a location in this state, 89 or from a customer who resides in this state, must comply with 90 this section. 91 (b)The bank shall enter into an agreement with any 92 counterparty bank requiring name identification as described in 93 this section and, if any beneficiary bank does not engage in 94 name identification and any loss occurs, the receiving bank 95 shall indemnify the originator. 96 Section 2.Section 670.208, Florida Statutes, is amended to 97 read: 98 670.208Misdescription of intermediary bank or 99 beneficiarys bank. 100 (1)This subsection applies to a Any payment order 101 identifying an intermediary bank or the beneficiarys bank must 102 use both only by an identifying number and a name. 103 (a)The receiving bank must may rely on the number as the 104 proper identification of the intermediary or beneficiarys bank 105 and need not determine whether the number identifies a bank and 106 whether the bank identified by number matches the name provided. 107 (b)The sender is obliged to compensate the receiving bank 108 for any loss and expenses incurred by the receiving bank as a 109 result of its reliance on the number in executing or attempting 110 to execute the order. 111 (2)This subsection applies to a payment order identifying 112 an intermediary bank or the beneficiarys bank both by name and 113 an identifying number if the name and number identify different 114 persons. 115 (a)If the sender is a bank, the receiving bank may rely on 116 the number as the proper identification of the intermediary or 117 beneficiarys bank if the receiving bank, when it executes the 118 senders order, does not know that the name and number identify 119 different persons. The receiving bank need not determine whether 120 the name and number refer to the same person or whether the 121 number refers to a bank. The sender is obliged to compensate the 122 receiving bank for any loss and expenses incurred by the 123 receiving bank as a result of its reliance on the number in 124 executing or attempting to execute the order. 125 (b)If the sender is not a bank and the receiving bank 126 proves that the sender, before the payment order was accepted, 127 had notice that the receiving bank might rely on the number as 128 the proper identification of the intermediary or beneficiarys 129 bank even if it identifies a person different from the bank 130 identified by name, the rights and obligations of the sender and 131 the receiving bank are governed by paragraph (a), as though the 132 sender were a bank. Proof of notice may be made by any 133 admissible evidence. The receiving bank satisfies the burden of 134 proof if it proves that the sender, before the payment order was 135 accepted, signed a writing stating the information to which the 136 notice relates. 137 (c)Regardless of whether the sender is a bank, the 138 receiving bank may rely on the name as the proper identification 139 of the intermediary or beneficiarys bank if the receiving bank, 140 at the time it executes the senders order, does not know that 141 the name and number identify different persons. The receiving 142 bank must need not determine whether the name and number refer 143 to the same intermediary or beneficiary bank person. 144 (d)If the receiving bank determines knows that the name 145 and number identify different banks persons, reliance on either 146 the name or the number in executing the senders payment order 147 is a breach of the obligation stated in s. 670.302(1)(a). 148 Section 3.This act shall take effect July 1, 2024.