Managing Fraud Risk: A Practical Guide for Directors and Managers

Getting Run Over by a Bus

I am sitting in an elegant room in an old mansion house in Luxembourg City in the Grand Duchy of Luxembourg. It is April 1995. The house has been used in the past as a private residence but now it operates as the main office of a large European private banking group. I am here as part of a team from Touche Ross assigned to review the effectiveness of the bank's anti-money laundering controls and to make any recommendations for improvements that we think are needed in order for the bank to meet best international practices. We have been in Luxembourg for over two weeks now. I am coming to the end of a very frustrating meeting with three of the bank's account managers. In fact there is only one more question that I need to ask them.

The meeting has been set up to go through a number of queries that we have arising from our review of client files. There seem to be a number of significant weaknesses in the bank's controls and procedures. Specifically, we have come across a series of client files that contain minimal information only – there is little documentation to support either the identity of the customer concerned or the source of the funds that the customer has placed with the bank to invest on his or her behalf. These are both critical controls, required by the authorities for compliance with the anti-money laundering regulations and so are matters of major importance for our report. The bank should have strong due diligence controls in place over ...