Banking Law

We've long been fond of  "419" e-mails, named after the section of Nigerian law that prohibits them. Most or perhaps all of you reading this blog have received an e-mail similar to the following real-life example, posted on the 419-busting site "419 Eater":

************************************************

From: Martins Jide
Date: Thursday, September 23, 2004 11:02 AM
Subject: URGENT REPLY

It is obvious that this proposal will come to you as a
suprise. This is because we have not met before but I am inspired to
sending you this email by the huge fund transfer opportunity that
will be of mutual benefit to the two of us.

However, I am Barrister Martins jide,the personal
attorney to the late Engr. Suk Hun Wufei flody, a Citizen of
Japan, who used to work with Nigerian National
Petrolum Co-operatrion (NNPC).

On the 26th of August 2003, my client,his wife and
their three were involved in a fatal house explossion at
Nigerian National Petrolum Co-operatrion (NNPC)
quaters Lagos.

Unfortunately they all lost their lives including
other people in the premises.Since then I have made
several enquiries to several Embassies to locate any
of my clients extended relatives, this has also proved successful.
After these several unsuccessful attempts, I decided
to trace his relatives over the Internet to locate any
member of his family but of no avail, hence I
contacted you.

I contacted you to assist in repartrating the money
and property left behind by my client since I have no
place to locate any of his relatives. I can easily
convince the bank with my legal practice that you are
the only surviving relation of my client.Otherwise the Estate he
left behind will be confiscated or declared unserviceable by the
bank where this huge deposits were lodged.

Particularly, My late client had an account with one
of the banks in Republic of Ghana valued at about
US$9.3Million (Nine Million Three Hundred Thousand
United States Dollars) which I witness the
documentations and the documents are with me.

Conseqently,The bank issued me a notice to provide the
next of kin to my client since I have been unsuccesfull in
locating the relatives.

I seek your consent to present you as the next of kin of the deceased
so that the proceeds of this account valued at US$9.3Million (Nine Million
Three Hundred Thousand United States Dollars) will be paid into
your account and then you and I can share the money. 55% to me and 40%
to you,while 5% should be for expenses,tax as your government may require.

I have all necessary legal documents that can be used
to back up any claim we may make. All I require is
your honest cooperation to enable us see this deal
through. I guarantee that this will be executed under
a legitimate arrangement that will protect you from
any breach of the law.

Please get in touch with me by return email .

Yours Faithfully,

Barrister Martins jide

N.B. Please indicate your telephone and fax numbers
for easy communication in this mutual transaction.

***********************************************

It's hard to believe that any person, no matter how simple, falls for one of these schemes. Yet, a recent conversation with a bank officer indicates that suckers are being born not every minute, but every nanosecond, and some of them are bank customers. Recently, a good customer of a community bank, a successful business person, arrived at the bank and asked the wire transfer department to wire tens of thousands of dollars to a foreign bank account as a "good faith deposit" to "cover expenses" involved in this sort of "advance fee" get-rich-quick scam. Luckily, the talkative customer showed the e-mail to the bank personnel. A bank officer was able to explain to the customer the risks involved and to dissuade him or her from being bilked. The bank officer who related this story to me assured me that this was not the only example she had seen of customers either falling for these schemes or asking bank personnel whether the offer was legitimate.

A bank confronted with a customer who is about to be suckered into parting with funds, but who is stopped prior to doing so, might wonder whether a suspicious activity report (SAR) should be filed. Inasmuch as 419 scam e-mails are as common on the internet as bird droppings are on any major highway, banks might fear that filing 419-related SARs in circumstances where no money was lost might become a full-time job for some unlucky employee. Luckily, FinCen has provided some guidance.

In The SAR Activity Review Issue 7, FinCen sets forth the reporting guidelines for these schemes. Basically, FinCen doesn't want to be buried under an avalanche of SARs, either.

If a monetary loss has not been incurred from an advance fee fraud scheme and
there are no other indicators of illegal activity warranting the filing of a Suspicious
Activity Report, a financial institution should not file a Suspicious Activity Report
and no further action is necessary.

If a monetary loss has been incurred from an advance fee scheme or the scheme
involves other indicators of illegal activity, such as investment fraud, counterfeiting,
forgery, or the misuse of an official United States Government seal, a financial
institution should consider filing a Suspicious Activity Report based on the
requirements of 31 C.F.R. Part 103 and the Suspicious Activity Report filing
instructions. In addition, the financial institution should contact the local United
States Secret Service field office, local police department, or other appropriate law
enforcement agency.

In other words, when it comes to 419s, "no harm, no foul." I know some banks who seem to be enamored of a theory of SARs filings that goes "when in doubt, file," and to a certain degree I can't blame them. When it comes to these types of scams, however, FinCen wants banks to restrain themselves.