A recent bevy of civil complaints brought against financial institutions by victims of Ponzi schemes raises questions over the extent to which financial institutions can detect and prevent large scale fraud perpetrated by their own customers, say sources.
A Florida regional bank on Thursday agreed to pay the U.S. Treasury Department $6.5 million to resolve allegations that long-term deficiencies in its compliance program helped facilitate a $1.2 billion Ponzi scheme.
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.
Add to the fallout of the largest-ever known Ponzi schemes another change to bank behavior: institutions are keeping more investigators tied to their desks in an attempt to identify big frauds.
U.S. financial regulators Monday fined Canada-based TD Bank $52 million for willfully failing to report suspicious transactions tied to one of the largest-ever known Ponzi schemes.
Several domestic and international banks are retraining investigators tasked with identifying fraud and money laundering to better uncover Ponzi schemes, say compliance officers and consultants.
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.
Toronto-Dominion Bank must pay a Texas investment company $67 million for its role in helping convicted attorney Scott Rothstein run a $1.2 billion Ponzi scheme, a Miami jury ruled Wednesday.
Two banks linked to a billion-dollar Ponzi scheme will likely face increased scrutiny from law enforcement and federal regulators following depositions last month by the convicted former head of a Florida law firm.