Crédit Agricole v Papadimitiou

Privy Council decision goes to the heart of what financial institutions should know about the commercial rationale behind transactions and the source of customers' funds.

This case¹ provides important guidance as to the circumstances in which a financial institution may be held to have had notice of impropriety based on its failure to ask proper questions about a financial transaction. The central question was whether Crédit Agricole ("the Bank") had constructive notice of a pre-existing proprietary right to funds which had been used to repay a loan facility. This would mean that the Bank would be unable to defeat a tracing claim brought against those funds by virtue of being a bona fide purchaser for value without notice. In order to determine whether the Bank had notice, the Board was required to consider whether its knowledge of the transaction through which it received the funds was such that it should have made further inquiries, and whether such inquiries would