An expected U.S. Treasury Department regulation aimed at improving corporate transparency may do more than task banks with additional recordkeeping. It could also expose financial institutions to greater civil liability when compliance goes wrong. In recent years, victims of Ponzi schemes and other frauds have increasingly sought compensation through lawsuits against banks over ostensible lapses in anti-money laundering (AML) controls that purportedly allowed the crimes. The plaintiffs have cited know-your-customer data, employee e-mails and other internal records to win, in some cases, hundreds of millions of dollars. The department's proposed customer due diligence rule would require banks to collect and...
Plaintiffs suing Toronto Dominion Bank over its ties to a convicted Ponzi schemer will likely reject a proposed comprehensive settlement that would grant the institution immunity from future litigation, say attorneys.
Federal financial regulators are questioning TD Bank about potential Bank Secrecy Act compliance lapses identified in the wake of the conviction of Florida-based Ponzi schemer Scott Rothstein, say sources.
In the legal wrangling that inevitably follows the collapse of Ponzi schemes, banks often escape liability. But in at least three lawsuits settled against two banks in the past year, financial institutions have been asked to pay up, and substantially.