WHEN YOUR OWN BANK'S ACCOUNT REPRESENTATIVES ENDANGER COMPLIANCE

 

Corruption personified

At the height of the Pinochet money laundering scandal, I learned that one of Panama's largest and most powerful law firms had formed shell companies for Augusto Pinochet-Ugarte and his lawyer, and reported on that news in my blog. I shortly received an urgent call from one of the senior partners in that firm, whom I knew personally, asserting that his firm formed those entities for a prominent Brickell Avenue Miami bank, but were unaware of the identity of the bank client for whom they provided this service, as he was only identified as a "good customers of the bank."

The lawyer offered to fly to Miami and show me the evidence forthwith, which he promptly did. The documents showed that the bank did not named their claim, other than to vouch for him. of course, had the Panama law firm known who the customer was at that point in the unfolding Pinochet scandal, they would most certainly not have participated, I was told, and I believed him. needless to say, that bank is no longer under the same management and ownership, and "reinvented" (renamed)  itself to throw off the taint of this and other scandals.

As a compliance officer, you are often butting heads with New Accounts, as well as Customer Relationship officers who judge their future bonus to be more important than AML compliance. You should always be on guard against unethical bank officers who see their short-term remuneration at the end of the current year as trumping compliance. Years later, they will be long gone to another bank, but you will be holding the bag when it is discovered that you did not put your foot down regarding dodgy (affluent) clients who twist the arms of their bank rep to disregard bank policies and procedure, or even the law. 

Never accept any uncorroborated statement from ambitious account officers about clients, especially regarding beneficial ownership, PEP status, Source of Funds or Source of Wealth; you will live to regret it. keep detailed notes and records about conversations, as you will find them invaluable later when it hits the fan, and certain officers hasten to blame compliance for not spotting or reporting something.