By Dr. Temu
Have you ever instructed your bank to make a payment, seen the money deducted from your account, only for the intended recipient to report that nothing was received? What rights do you have as a customer in such a situation? And what obligations does your bank owe you, especially after confirming that it acted on your instructions?
These questions were squarely addressed in Equity Bank Tanzania Ltd v. Prudence Alibalio Katangwa, Civil Appeal No. 324 of 2024, a recent decision delivered by the Court of Appeal of Tanzania on 24 March 2026. The Court dismissed Equity Bank’s second appeal and upheld the High Court’s order requiring the Bank to refund £7,000 to its customer after an international funds transfer to the United Kingdom failed.
But what were the facts?
The facts of the case were straightforward yet significant. In March 2016, the respondent instructed Equity Bank to debit £7,000 from his account and transfer it to Walker Movement Ltd in the United Kingdom for the purchase of a MAN TGA truck. The Bank executed the debit and initiated an Electronic Funds Transfer through Citibank London as the intermediary. The funds, however, never reached the intended beneficiary. Despite repeated follow ups, the respondent could not obtain clarity on the status of the transfer. Citibank later indicated that the funds had been withheld pending additional information, but the correspondence showed that such requests were directed to Equity Bank and not to the customer. Having received neither the goods nor a refund, the respondent filed suit. The trial court dismissed the claim, the High Court reversed that decision, and Equity Bank appealed to the Court of Appeal.
The Reasoning
The Court of Appeal held that although the customer bore the initial burden of proof, he had fully discharged it by demonstrating that the money was debited from his account and never received by the beneficiary. The Court emphasized that in an Electronic Funds Transfer, the customer has no access to interbank systems and cannot be expected to manage or supervise communications between banks. By relying on Regulation 35 and Regulation 58 of the Financial Consumer Protection Regulations of 2019, the Court reaffirmed that the initiating bank carries both fiduciary and statutory responsibility to safeguard customer funds, trace their movement, and resolve any failures in the transfer chain. The Court rejected Equity Bank’s argument that its duty ended once Citibank confirmed receipt of the funds. It noted that the Bank failed to tender evidence of the alleged additional information requested from the customer and that Citibank’s correspondence was addressed to the Bank itself and not to the customer.
The Decision
The Court concluded that the funds were lost while under the control of the appellant bank and that the customer had no further duty to perform after issuing lawful transfer instructions. Because Equity Bank failed to complete the transfer, failed to trace the funds, and failed to comply with its statutory obligations as the initiating financial service provider, it remained liable for the loss. The Court therefore upheld the High Court’s judgment in full, ordering Equity Bank to refund the £7,000 and dismissing the appeal with costs.
Why does this decision matters?
This decision firmly establishes that in Tanzania’s financial regulatory framework, the initiating bank bears full responsibility for the integrity and completion of an international funds transfer. Once a customer issues lawful instructions and the bank debits the account, the customer’s role ends. The bank must manage all interbank communications, compliance checks, and tracing obligations. By upholding the High Court’s order for a refund, the Court of Appeal reinforced the fiduciary nature of the banker–customer relationship and underscored the binding force of consumer protection regulations that require banks to safeguard customer assets and resolve transfer failures. The judgment strengthens accountability in the banking sector and signals that operational lapses within the transfer chain, whether domestic or international, will not be shifted onto consumers.
Still unanswered!!
Although the Court of Appeal decisively resolved the refund issue, the judgment leaves several important questions open for future clarification. One unresolved issue is whether a bank may also be liable for consequential damages such as loss of bargain, lost profits, or business interruption when a failed international transfer causes a customer to miss a commercial opportunity. The Court did not address whether such losses are too remote or whether they are foreseeable in the context of Electronic Funds Transfers. Another unanswered question concerns the extent of a bank’s duty to anticipate or mitigate compliance related delays by intermediary banks and whether customers should be compensated for prolonged investigations that prevent funds from reaching their destination. The judgment also does not clarify what happens if the funds are later traced or released after the bank has already refunded the customer, raising questions about restitution and the bank’s recourse against correspondent banks. These gaps show that although the decision strengthens consumer protection, the broader contours of bank liability in cross border transfers remain an evolving area of Tanzanian financial law
Disclaimer: The information contained in this legal update is for information purposes only and does not constitute legal advice, nor does it create an attorney-client relationship. For more information and professional legal counsel,
please write to us at info@africorp.co.tz or give us a call at +255 22 211 0660.
