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2010 saw several notifications where the conversion of Australian dollars into foreign currency before sending it overseas has led to complaints by the recipient.

Lawyers are often called to send money overseas in the context of distributing deceased estates or paying the proceeds of sale of a property or a business to a client now living overseas. In some instances no one has thought about the form of the currency to be sent until the bank officer dealing with the transaction recommends that the money be converted to the foreign currency before it is sent, as the ‘usual practice’. The clerk or accounts department employee of the firm just accepts the recommendation not appreciating the implications. Sometimes the client does actually instruct the practitioner how the money is to be transferred but those instructions are not passed on to person organising the transfer.

In the recent cases we have seen the clients all maintained afterwards that they wanted the money transferred in Australian dollars because it could more readily be invested as opposed to the currency of the country. There were also complaints about the very poor rate of conversion offered by the bank. The movement of currency rates from day to day can means big losses if the client insists on converting the money back even a week after the initial transfer.

In some instances the bank may say it is not able to transfer money in Australian dollars to the desired destination. In one claim that was the case. However, what the bank did not tell the law firm was that a different bank (with a branch across the road) could send money to the destination in Australian dollars.

Risk Management:

  • Whenever money is being sent overseas, clear written instructions should be obtained as to the currency in which the money is to be transferred.
  • Ensure that staff arranging for the transfer of funds understand the issues and only act on clear written instructions as to the currency to be used.
  • If the bank says they cannot send money in Australian dollars, question them as to why and shop around as another bank may be able to do so.