Banks occupy a central position in every modern economy. They help to mobilise savings, provide credit, facilitate payments and support business growth. These activities depend on a structured relationship between banks and their customers, a relationship shaped by law.

This legal side of banking determines who is responsible for what, how disputes are handled and how trust is maintained when things go wrong. In simple terms, banking legality means operating within clear, valid laws and fair procedures that both banks and customers can understand and follow.

A sound legal framework protects customers and banks, promotes financial stability, and builds public confidence in the financial system. When banks comply with the law, customers can feel more secure about where they place their money. When customers respect their obligations, banks can function efficiently and responsibly. In this way, legality supports both day-to-day banking and the wider stability of the economy.

At the heart of this framework is the relationship between banks and their customers. Understanding the roles each party plays is essential for trust, accountability, and financial stability.

The responsibility of banks towards customers

Banking is often described as the business of accepting deposits from the public and lending them to those who need funds, while offering payment and settlement services. In practical terms, this creates several legal and ethical obligations for banks.

First, banks owe customers a duty of care. This duty is rooted in both contract and common law and requires banks to act reasonably and to show skill and diligence in all dealings with customers. Banks must properly handle customer instructions, provide accurate information, and avoid negligence that could lead to financial or reputational loss. Courts have consistently reinforced this duty.

In Hedley Byrne & Co Ltd v Heller & Partners Ltd (1964), for example, the court found that a party could be liable for negligent statements that cause economic loss. A recent Supreme Court of Ghana decision involving garnishee orders (Asamoah Gyan v Garnishee Orders, 2025) highlights the procedural safeguards required before a bank can be ordered to pay out funds belonging to a customer, particularly where appeals and stay applications are ongoing.

Second, banks must honour lawful customer instructions, such as cheques and payment orders, provided there are sufficient funds, the instructions are not fraudulent, and there is no legal impediment. In doing so, however, banks are expected to exercise caution. In Barclays Bank v Quincecare Ltd (1992), the court held that a bank must refuse to execute instructions that are clearly fraudulent, even if they appear to come from the customer.

Third, banks have a responsibility to maintain confidentiality. Customers trust banks with sensitive financial information, and banks are legally required to protect it, except where disclosure is permitted or required by law or regulation.

Finally, banks must comply with statutory and regulatory requirements. In Ghana, laws such as the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930), the Bank of Ghana Act, 2002 (Act 612), and the Payment Systems and Services Act, 2019 (Act 987) regulate banking operations. These laws aim to promote transparency, protect customers, ensure fair treatment and keep deposits safe.

The role of customers towards their banks

The relationship between a bank and its customers is not one-sided. Customers also have clear responsibilities towards their banks.

Customers are expected to provide accurate information when opening and operating accounts. False or misleading information undermines the bank’s ability to meet anti-money laundering and know-your-customer requirements. Customers also play a direct role in preventing money laundering. They are expected to disclose the true sources of their funds and wealth, to use their accounts for lawful purposes only, to avoid breaking up transactions in an attempt to hide their size or purpose, to report errors or unauthorised activity on their accounts and to cooperate with the bank’s monitoring and due diligence on their accounts.

In 2025, the Accra Circuit Court remanded a trader in custody and charged her with stealing and money laundering after funds were erroneously credited to her bank account and she failed to disclose, report or return them. In that case, a company CEO instructed the transfer of GH¢800,000 to his personal account, but the quoted account number was mistakenly that of the trader. The money was paid into her account. The trader allegedly spent most of the funds, moved large amounts to other accounts, and withdrew cash. She was charged with stealing and money laundering, and her mother was charged with abetment of money laundering. The case is a clear reminder that customers must not treat mistaken credits as free money.

Customers must also issue clear and lawful instructions. Where instructions are ambiguous, illegal or suspicious, banks are entitled, and sometimes required, to refuse to act.

In addition, customers have a duty to manage their accounts responsibly. This includes monitoring transactions, reporting errors or fraud quickly and repaying loans in line with agreed terms. Banking contracts impose obligations on customers as well as duties on banks.

The case of Haajara Farms Ltd v SG-SSB (Loan Enforcement – High Court, Tamale) confirms the liability of a customer who defaults on a bank loan. In that case, the bank granted a sizeable loan to a customer to purchase vehicles for business use. The borrower failed to repay the loan despite repeated demands, and the bank sued to recover the principal and interest. The court examined the contractual obligations and upheld the bank’s right to repayment.

Conclusion

Banks and customers are partners bound together by law, trust, and mutual responsibility. Banks must act with care, transparency, and integrity. Customers must act honestly, responsibly, and in good faith. When both sides understand and respect their roles, the banking system becomes not only a vehicle for economic growth but also a pillar of social and financial stability.

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The writer, Mary Poku, Trade Sales Manager, Absa Bank Ghana LTD