PUBLIC

Elements and Ethics in Banking

(Mandate, Garnishee order, Power of Attorney etc.)

Presented by

MICHAEL DANKWA OSAFO

B.A( Econs & Stats),MBA(Finance),IPFM,ACIB,CA

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 TYPICAL ACTIVITIES OF OPERATIONS STAFF
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• Salary processing
• Loan processing
• Cheque processing(inward and outward)
• Initiating intra and interbank transfers
• Treasury Bills and Fixed Deposits processing
• Standing orders processing
• Calling Over day’s work
• Issuance of managers cheques
• ATM management
• Authorizing teller transactions beyond limits(authorization)
• Trade transfers

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 MANDATE
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• A mandate is an instruction given to the bank by its customer

regarding the operation of the account so that there can be no
ambiguity or doubt as to what the account holder(s) intended.
• Typically, a mandate should cover drawing of cheques, release of
items deposited for safe keeping, request for statements etc.
• A mandate only remains valid and operative whilst the account
holder or holders are alive. As soon as a sole account holder or
one of several account holders dies then the account mandate is
terminated. Note particularly, that if the account holder is say, a
limited company, or a club or society then such a body cannot die
– and thus when an authorized signatory dies the mandate is not
terminated.
• An account holder may wish to delegate his authority to a third
party concerning the operation of his bank account and/or
banking affairs and where this is permissible the bank will always
require such an authority to be given in writing.
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General Rules on Delegation of Authority

• Occasionally, delegation is not legally permissible. For example, (with

minor exceptions) all trustees must sign cheques;

• Where the account is not in sole name, all parties to the account
must authorize delegation;

• In general, anyone can be appointed as agent to operate a bank

account, including minor. (Although a bank would never permit a
minor who is ‘not adult enough’ to act as agent, e.g. for a parent
customer’s account);

• A person who is mentally incapacitated cannot be appointed an

agent;
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General Rules on Delegation of Authority
• The standard form of bank mandate just covers the operation of a
credit account. If the agent is to draw, accept or endorse bills of
exchange or create overdrafts or loans, or charge the principal’s
property as security, these must be expressly provided for as there is
no implied power to carry out any of these actions;
• The powers of the agent will continue until the relationship is
terminated. After termination, any cheques signed by the agent
must be returned- even if they are dated prior to the termination of
the mandate;
• An agent may not delegate his authority to another party;
• When a mandate is taken, it may authorize the agent to sign on one
account or any account in the principal’s name. Furthermore, it may
only give power to operate accounts currently opened – as opposed
to accounts which will be opened in the future. The mandate must
be carefully read (and amended where necessary) to cover the
required situation. CONFIDENTIAL
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POWER OF ATTORNEY

• A Power of Attorney is a formal authorization in writing,

signed and sealed, giving a person power to act either
generally, in a specified manner or in relation to a specific
transaction on behalf of the person who gives the power. It
must be executed as a deed.

• The person who gives the power is called the Appointor,

Grantor or the Donor and the person to whom the power
is given is known as the Appointee, Grantee or Donee or
the Attorney.

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HOW TO EXECUTE A DEED

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• An individual:
The document ends with words ‘Signed and delivered by……………..’ and
is expressed on its face to be a deed;
Signature must be witnessed;
The document must be delivered to the other party by the individual or
his agent.
• A Corporate Body:
It is no longer mandatory for a company to impress its common seal
upon a document intended to be a deed.
A document signed by a director and the secretary of the company or
by two directors of the company, and expressed (in whatever form of
words) to be executed by the company, has the same effect as if
executed under the Common Seal of the company.
If a document executed by the company states on its face that it is
intended to be a deed, then it takesCONFIDENTIAL
effect as a deed on delivery.
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TYPES OF POWER OF ATTORNEY

A Power of Attorney is of two types, namely:

i. A Specific Power i.e. Power given for a specific purpose: (e.g.

Power to sign a Deed of Mortgage for and on behalf of the Donor)

ii. General Power i.e. General authority intended to operate for a

period of time. This operates to confer on the Donee authority to do on
behalf of the Donor anything which the Donor can lawfully do.

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GENERAL RULES IN RELATION TO POWERS OF ATTORNEY

• Generally, any person having power to contract may appoint an

Attorney.
• A body corporate may appoint an Attorney to do intra vires acts but
here, the regulations of the body corporate must be consulted for
any possible restrictions or laid-down procedures.

• The Attorney, being an agent, need himself not have contractual

capacity hence a minor or infant can be appointed.

The following must be noted carefully:-

A Power of Attorney must be definite and not provisional or conditional

on eventualities. A document of this nature which is contingent upon
such a phrase as ‘during my absence from Ghana’ is dangerous and
should not ordinarily be accepted, as the return of the Grantor may
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GENERAL RULES IN RELATION TO POWERS OF ATTORNEY

Care must be taken to see that an agent does not exceed the powers
granted to him. A general authority to transact business and to receive
and discharge debts does not give an agent power to borrow or pledge
or to draw, accept and endorse bills, nor does an authority to draw bills
confer authority to accept or endorse and vice versa.

If government securities are to be dealt with, specific reference must

be made to such securities. In the event of an Attorney delegating any
of his powers to a third party it must be ascertained that that
substitution is provided for in his Power of Attorney.

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GENERAL RULES IN RELATION TO POWERS OF ATTORNEY

• The Bank is justified in refusing to register a Power of Attorney

written in a foreign language unless an authentic English translation
thereof is attached to it. As Power of Attorney is not a document
issued by a Court, it may not be possible to get an official translation.
In such case, the translation should be checked and verified by some
reliable person who knows the language in which the text of the
Power of Attorney is written.

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REVOCATION (DETERMINATION) OF THE POWER OF ATTORNEY

A power of Attorney is revoked or determined in the following

circumstances:

• Express revocation of the power by the Donor or by the Donee;

• By operation of Law e.g. upon the death, mental incapacity or
insolvency of either the Donor or the Donee;
• Upon the expiry of the period for which the Power was given;
• Upon the completion of the purpose for which the Power was given;

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REVOCATION (DETERMINATION) OF THE POWER OF ATTORNEY

By implication e.g.

Where the circumstances leading to the granting of the Power exist

e.g. return from abroad;

Where a new power is executed in favour of the same Attorney or

another Attorney;

Where, in the case of a Power to operate a bank account, the Donor

himself commences operations on the account. In such a case,
confirmation should always be obtained from the Donor in writing.

When a Power of Attorney lapses or is revoked, it shall be cancelled

from the Power of Attorney Register and all related books and records
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under the date of the cancellation and the initial of a responsible
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GARNISHEE ORDER

• This is a court order instructing a garnishee(a bank) that funds held

on behalf of a debtor (the judgment debtor) should not be released
until directed by the court. The order may also instruct the bank to
pay a given sum to the judgment creditor (a person to whom a debt
is owed by the judgment debtor) from these funds.

• If the garnishee order is from a lower court, it is known as a

garnishee summons, if its from a High Court, it is known as a
Garnishee Order.
• Parties to a Garnishee order:
• The judgment debtor-the bank customer
• Judgment creditor-the party who has obtained the order or
summons and is making a claim on part or all of the judgement
debtors balance
• Third party – bank which must comply with the terms of the order or
summons also known as the garnishee.
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General rules on Garnishee Order

• A Garnishee order must first be an order nisi. That is the order

directed to the garnishee instructing him to show cause why the
debt claimed to be due or accruing from him to the judgments
debtor should not be utilized to satisfy the judgments debt and the
cost of the garnishee processing
• The garnishee order nisi must state the name of the customer
correctly or with sufficient accuracy to enable the bank to identify
the account in its books as that of the judgment debtor, the time and
place for further consideration of the matter and in the meantime
attaches the debt claimed to be due or accruing from the garnishee
to the judgments debtor or so much of it as may be specified in the
garnishee.
• The monies attached are those standing to the customer’s credit at
the moment of service of the garnishee order nisi and for which he
could sue.
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General rules on Garnishee Order

Monies paid into account of the judgment debtor after service of a

garnishee summons could not be attached e.g. proceeds of shares sold
at customer’s instructions.
Also if customer has more than one account and the net balance is a
debit, no money is attached.
When a loan account is not due, it cannot be set off against a current
account. For that matter, the balance on the current account is
attached.

Un cleared effects
The proceeds will not be attached unless the bank would have allowed
the customer to withdraw the funds
A sum in foreign currency will be attached notwithstanding that the
judgment is given in the local currency
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General rules on Garnishee Order

Joint accounts/partnerships – a joint account or partnership account

cannot be attached in respect of a debt owed by one of the parties

A garnishee order naming two judgment debtors will attach a

balance standing in the name of one
A garnishee order naming two judgment debtors will attach a
balance standing in their joint names.
A liquidator’s account cannot be attached in respect of a debt owed
by a company of which he was liquidator. The reasoning is that they
are separate entities.
The bank must nonetheless notify the court that the account is a trust
account, and should for that matter not be available to the judgment
creditor.
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Balances abroad – these are not attached because they are not within
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STEPS TO TAKE WHEN YOU RECEIVE A GARNISHEE ORDER

• Immediately scan and send a copy of the Garnishee Order

to a legal unit or department(internal audit in absence).
• Block the account of the Customer in question and inform
him accordingly.
• Note the date that you are to go to court (hearing date).
• On the hearing date, print the Customer’s Statement of
Account from the date the Garnishee Order was received
to the hearing date.
• Go to court on the hearing date, taking along a copy of
Customer’s Statement of Account.
• Indicate the amount of funds in the account when called
upon and present the Customer’s Statement of Account if
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DECEASED CUSTOMER

• It is essential that the bank exercise caution with regards

to accounts of deceased customers. Notice of death of a
customer may be in the form of letter or in person by a
relative, friend or any other person who knows the
customer. Newspaper publication or radio, TV
announcements will also suffice.

• Upon receipt of the notice the bank will block the

account of the customer to ensure that no payment is
subsequently made from the account.

• Where a cheque is drawn on the account of the deceased

customer is presented, appropriate
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notation should be
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Disposition of balances on deceased customers account

• Where the deceased customer has a personal account

with the bank, the balance on the account will be
disposed in line with probate of the customer or letter of
administration from court received by the bank. Funds
will only be released upon receipt of the required legal
documents.

• Where a deceased customer has a joint account with

another person, the disposition of the balance in the
account will be done in accordance with survivorship
clause of the bank. Thus the balance on the account
belongs to the surviving partner. Any other valuables
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should be held in safe custody.
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EXECUTORS AND ADMINISTRATORS

• Persons appointed to wind up and distribute

the estate of a deceased person are called
Personal Representatives. Personal
Representatives appointed by the deceased
in his Will are called EXECUTORS, while those
appointed by the Court are called
ADMINISTRATORS. Administrators are
appointed where a person dies without
making a Will. CONFIDENTIAL
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 Probate and Letters of Administration
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a. A Probate confirms the Executor’s

authority under law to manage the estate of
the deceased.
b. Letters of Administration is the official
document empowering a person, called the
Administrator to administer the estate of the
deceased. Before Probate or Letters of
Administration are granted, duty on the gross
declared valued of the estate must be paid to
the Internal Revenue Service, through the
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 Withdrawals and Recovery
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a. The balance cannot be withdrawn until probate or

Letters of Administration have been presented to the Bank
and recorded. This applies to the withdrawal of securities
and safe custody items.

b. To effect a recovery from the deceased’s estate (his

account having been stopped on notice of death) the
representatives will be informed of his liability.

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 Withdrawals and Recovery
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If the deceased’s security is held to cover his liabilities the

personal representatives may wish to pay off the overdraft
immediately in order to obtain its release. Alternatively, they
may wish the security to be sold to pay off the overdraft.
Accounts operated by Executors/Administrators
a. An Executor’s account can be opened immediately on
death of the testator subject to presentation of the Probate
or the Will. The account is usually styled to allow for
continuity, e.g. “Executors of the Estate of the late “X”
Messrs A.B.C. Executors”.
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 Withdrawals and Recovery
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An Administrator’s account can similarly be opened upon

presentation of Letters of Administration.

In view of the complexities associated with the opening and

operation of Executors Accounts branches are advised to
contact the Legal Department for directions any time they
receive applications to open executors account.

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An Administrator’s account can similarly be opened upon

presentation of Letters of Administration.

In view of the complexities associated with the opening and

operation of Executors Accounts branches are advised to
contact the Legal Department for directions any time they
receive applications to open executors account.

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