Banks Fails To Conduct Due Diligence On Fraudulent Customer

Case Overview

This case involves plaintiffs who sought to recover damages allegedly caused by a correspondent bank’s failure to act in response to a multi-billion dollar fraud. Its customer, an international banking company, sold certificates of deposit to individuals. Funds were illegally diverted and used to fund the lifestyles of top executives. It was alleged that the correspondent bank did not conduct appropriate anti-money laundering due diligence for nearly 10 years. An expert in correspondent banking was sought to opine on the standards of a reasonable bank, namely the circumstances in which due diligence would be applied.

Questions to the Business expert and their responses

Please describe your experience in correspondent banking.

In 1973, I began working at the largest international bank in Canada where I held many different positions for 30+ years. In 1991, I became senior manager of financial institutions and worked my way up to vice president of global transaction banking until I became a consultant in 2008. I've dealt with client relations, management, correspondent banking services, operations, compliance, AML, and risk management along with many other facets. I managed both teams on a global scale.

In what circumstances would you flag your colleagues regarding an account?

I would be able to speak about client relationships, when red flags should go off for correspondent banking directors, and when AML is brought in to assess a situation.

About the expert

This expert is an international bank executive with over 30 years of continuous service with Canada's most international bank, who fulfilled assignments in the Caribbean among other parts of the world. He has worked in several leadership roles in Canada overseeing 140 officers in the global transaction banking group during 2001 to 2008. After working his way through small groups in domestic banking as a manager, he became senior manager of trade and financial institutions from 1991 to 1994. In this position, he was responsible for managing key correspondent banking relationships and maximizing fee income for relationships in the US and Canada. In 1994, he became director of trade and financial institutions where he managed the top 200 correspondent banking relationships and implemented key strategic sales to maximize relationships with global clients. In mid-1998, he became the executive head and country manager continuing to provide corporate banking services and strategies to global clients. Finally in 2001, this expert became vice president of global transaction banking. Throughout his 34 year career at Scotiabank, this expert oversaw global financial institutions with respect to trade and cash, management sales, correspondent banking services, business development, operations, compliance, AML, risk management, and export credit agencies. He has managed both teams in Canada and abroad and is now currently working as a transaction banking, cash management, and financial advising consultant.

E-202800

Specialties:

Business