New York Laws
Part 2 - Issue and Acceptance of Payment Order
4-A-207 - Misdescription of Beneficiary.

(1) Subject to subsection (2), if, in a payment order received by the
beneficiary's bank, the name, bank account number, or other
identification of the beneficiary refers to a nonexistent or
unidentifiable person or account, no person has rights as a beneficiary
of the order and acceptance of the order cannot occur.
(2) If a payment order received by the beneficiary's bank identifies
the beneficiary both by name and by an identifying or bank account
number and the name and number identify different persons, the following
rules apply:
(a) Except as otherwise provided in subsection (3), if the
beneficiary's bank does not know that the name and number
refer to different persons, it may rely on the number as the
proper identification of the beneficiary of the order. The
beneficiary's bank need not determine whether the name and
number refer to the same person.
(b) If the beneficiary's bank pays the person identified by name
or knows that the name and number identify different persons,
no person has rights as beneficiary except the person paid by
the beneficiary's bank if that person was entitled to receive
payment from the originator of the funds transfer. If no
person has rights as beneficiary, acceptance of the order
cannot occur.
(3) If (i) a payment order described in subsection (2) is accepted,
(ii) the originator's payment order described the beneficiary
inconsistently by name and number, and (iii) the beneficiary's bank pays
the person identified by number as permitted by paragraph (a) of
subsection (2), the following rules apply:
(a) If the originator is a bank, the originator is obliged to pay
its order.
(b) If the originator is not a bank and proves that the person
identified by number was not entitled to receive payment from
the originator, the originator is not obliged to pay its
order unless the originator's bank proves that the
originator, before acceptance of the originator's order, had
notice that payment of a payment order issued by the
originator might be made by the beneficiary's bank on the
basis of an identifying or bank account number even if it
identifies a person different from the named beneficiary.
Proof of notice may be made by any admissible evidence. The
originator's bank satisfies the burden of proof if it proves
that the originator, before the payment order was accepted,
signed a writing stating the information to which the notice
relates.
(4) In a case governed by paragraph (a) of subsection (2), if the
beneficiary's bank rightfully pays the person identified by number and
that person was not entitled to receive payment from the originator, the
amount paid may be recovered from that person to the extent allowed by
the law governing mistake and restitution as follows:
(a) If the originator is obliged to pay its payment order as
stated in subsection (3), the originator has the right to
recover.
(b) If the originator is not a bank and is not obliged to pay its
payment order, the originator's bank has the right to
recover.