This case is a class action matter involving multiple financial institutions located in North America. The plaintiffs in this matter included a group of investors within a community who were victimized by an alleged fraud scheme. The plaintiffs believed they were investing in an innovative system to permanently remove body hair, but the perpetrator of the scheme took the money and laundered it through a number of offshore accounts, eventually deposited as trust checks. In total, he funneled tens of millions of dollars through one financial institution. It was alleged that the bank should have detected the fraud, and shut down the offending accounts, thereby preventing the large scale fraud.
Question(s) For Expert Witness
- 1. Please describe your background in the banking industry, particularly roles relating to compliance/operations.
- 2. What systems are typically in place to stop these types of schemes?
Expert Witness Response E-078842
I have twenty years of banking experience in compliance and operations. I was a compliance officer at a major Asian bank and ensured that electronic fund transfers were done according to relevant laws. As an assistant vice-president for a major North American bank and the manager of the bank’s second biggest retail branch, I oversaw compliance and branch transactions. I ensured that KYC rules were followed and that any transaction over $10,000 made within 24 hours, as well as any suspicious transactions, were declared to the relevant authorities. There are a number of preventative and protective measures to prevent schemes like this one. Automatic electronic monitoring is used to make sure that any deposit totaling $10,000 within a period of 24 hours is referred to the authorities. Yearly employee training (KYC, detection, prevention and deterrence of money laundering and the financing of terrorist activities), laws against money laundering and terrorist financing activities (penalties and prison sentences), compliance procedures and centralised information gathering, as well as reporting are also other ways to prevent schemes like this.