Opinion ID: 1365781
Heading Depth: 2
Heading Rank: 1

Heading: The Attachment of Midstream EFTs under Various Federal Statutes

Text: In addressing whether EFTs may be subject to garnishment or attachment in various contexts, we consider both the nature of EFTs and the legal provisions that regulate them. As we have previously observed: An EFT is nothing other than an instruction to transfer funds from one account to another. When the originator and the beneficiary each have accounts in the same bank[,] that bank simply debits the originator's account and credits the beneficiary's account. When the originator and beneficiary have accounts in different banks, the method for transferring funds depends on whether the banks are members of the same wire transfer consortium. If the banks are in the same consortium, the originator's bank debits the originator's account and sends instructions directly to the beneficiary's bank[,] upon which the beneficiary's bank credits the beneficiary's account. If the banks are not in the same consortiumas is often true in international transactionsthen the banks must use an intermediary bank. To use an intermediary bank to complete the transfer, the banks must each have an account at the intermediary bank (or at different banks in the same consortium). After the originator directs its bank to commence an EFT, the originator's bank would instruct the intermediary to begin the transfer of funds. The intermediary bank would then debit the account of the bank where the originator has an account and credit the account of the bank where the beneficiary has an account. The originator's bank and the beneficiary's bank would then adjust the accounts of their respective clients. Jaldhi, 585 F.3d at 60 n. 1. After making these observations about the nature of EFTs, we recently held that EFTs in the temporary possession of an intermediary bank cannot be subject to attachment under Rule B of the Supplemental Rules for Admiralty or Maritime Claims and Asset Forfeiture Actions of the Federal Rules of Civil Procedure (Rule B). Id. at 71. We arrived at this conclusion because Rule B authorizes the attachment only of defendant's ... property and because midstream EFTs are the property of neither the originator nor the beneficiary of the EFT under New York law. [2] Id. We note that our holding and analysis in Jaldhi was based firmly on the specific wording and provisions of Rule B that limit attachment to property owned by the defendant. As we recognized in Jaldhi, EFTs that are temporarily in the possession of an intermediary bank may be seized pursuant to other federal statutes, such as 21 U.S.C. § 881, because the language and purpose of those provisions differ significantly from Rule B. Id. at 68-69. In contrast to Rule B, we noted that the forfeiture provisions of 21 U.S.C. § 881 require only that the EFTs be traceable to ... illegal activities and do not require any inquiry into the identity of the owner of the EFTs. Id. at 69. In sum, Jaldhi instructs that whether or not midstream EFTs may be attached or seized depends upon the nature and wording of the statute pursuant to which attachment or seizure is sought. Here, ExIm sought writs of garnishment pursuant to the FDCPA. In line with Jaldhi, we therefore look to the FDCPA's language to determine whether the District Court properly quashed ExIm's writs of garnishment to the extent those writs restrained EFTs at intermediary banks.