KRS 355.4A-207: Misdescription of beneficiary.

(1) Subject to subsection (2) of this section, 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) of this section:

1. 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; and

2. The beneficiary's bank need not determine whether the name and

number refer to the same person; and

(b) 1. If the beneficiary's bank pays the person identified by name or knows

that the name and number identify di fferent 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.

2. If no person has rights as beneficiary, acceptance of the ord er cannot

occur.

(3) If a payment order described in subsection (2) of this section is accepted, the

originator's payment order described the beneficiary inconsistently by name and

number, and the beneficiary's bank pays the person identified by number as

permitted by subsection (2)(a) of this section, the following rules apply:

(a) If the originator is a bank, the originator is obliged to pay its order; and

(b) 1. If the originator is not a bank and proves that the person identified by

number was not entitled to receive paymen t 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.

2. Proof of notice may be made by any admissible evidence.

3. The originator's bank satisfies the burden of p roof if it proves that the

originator, before the payment order was accepted, signed a record

stating the information to which the notice relates.

(4) In a case governed by subsection (2)(a) of this section, if the beneficiary's bank

rightfully pays the pe rson 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)

of this section, the originator has the right to recover; and

(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.