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  • Writer's pictureStoil Petrov

A case law opening for the victims of financial scams

Updated: Sep 24, 2021

On February 17, 2021, the Court of Cassation issued two important rulings which will allow victims of internet scams to sue foreign banking establishments, recipients of their funds, before French courts.

I. Before: a territorial jurisdiction often refused

The legal battle between the victims of internet scams and the banks receiving their funds began in 2016. Foreign banking establishments systematically raised procedural incidents aimed at rendering the French courts incompetent to judge their cases. The French courts systematically declared themselves to be territorially incompetent. Thus, in several cases the victims were dismissed of their requests to engage the responsibility of the beneficiary banks of their funds in France, which considerably complicated their procedures since they were obliged to assign the beneficiary banks instead of their headquarters to the 'foreign.

II. From now on: an accepted territorial competence

As part of its judgments dated February 17, 2021, the Court of Cassation ruled in favor of the victims of false investment scams and confirmed the possibility for the latter to turn against banks or foreign payment processors by them. assigning directly to France. The only condition for this territorial jurisdiction of the French judge is that the victim also sues before the French court his own French bank, which issued the transfers. For the Court of Cassation, it is in the interest of good justice to have the issuing bank and the receiving bank tried together.

These decisions were eagerly awaited. Insofar as the victims of financial scams, at the request of the crooks, transfer their funds to banks located in several foreign countries, the classic position of the French courts required the victims to initiate litigation in the country where the beneficiary bank had its headquarters which generated substantial costs and had the effect of slowing down the legitimate actions of the victims.

* * *

In short, a victim of a scam who transferred their funds to a fraudulent platform can now engage the responsibility of the foreign bank in France, provided that this action also targets his own French bank which issued the disputed funds.

The questioning of banks, both French and foreign, is based on the existence of European legislation which imposes strict requirements on banks with regard to their obligations of vigilance, surveillance, knowledge of their customers (KYC) and implementation of very rigorous mechanisms to combat the use of the financial system for the purposes of money laundering or terrorist financing (AML).

Thus, the issuing banks must remain vigilant with regard to any activity on the part of their customers likely to be judged as "abnormal" compared to the usual management of their accounts, while the beneficiary banks must scrupulously scrutinize the profiles of their customers. and may be held liable in the event that they have accepted the opening of a bank account with a company whose activity is illegal.

Me Svinarova-Petrova is a lawyer specializing in disputes with stockbrokers in France. She is working on these files with Stoil Petrov, an expert in the field of financial disputes and scams.

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