NOW IT'S KYCA: KNOW YOUR COMPLIANCE ADVISER

FROM THE - CHRONICLES of Monte Friesner – Criminal & Intelligence Analyst and Consulaire for WANTED SA~
~Contributed & Written by Kenneth Rijock ~

Much has been made in the media about the multi-million dollar fine levied upon Gibraltar Private Bank, for its abject compliance failures, regarding its support of Scott Rothstein's Ponzi scheme, but there's a more important lesson here. Why didn't the bank's outside compliance adviser ever identify the problem ?

The bank's former president has filed a large civil suit, asserting that he was made a scapegoat by the bank's board, and blamed for the bank's willing role as a Ponzi banker, but the buck stops elsewhere. 

The bank had engaged a local Miami company as compliance adviser, after it came under the regulatory microscope. but it never warned the bank about a possible problem, even through all the red flags were there, and any competent competent firm should have caught them.

Scott Rothstein's law firm did not show up, on court dockets in all three South Florida Circuit Courts, as participating in anywhere the number of cases that would have been necessary to justify the huge "settlements" he sold to unsuspecting investors, who became his victims. Why wasn't this done, early on, by the bank's compliance adviser ?

The answer lies in the word competent; had the bank performed its own due diligence investigation upon the compliance firm, it would have quickly learned that the company had an abysmal record on rehabilitating financial institutions with AML/CFT issues, even though prior clients had laid out substantial fees for this service. What was wrong ?

Since 9/11, many opportunistic companies have eagerly dived into the anti-money laundering field, but a number of them are not qualified, by neither training nor experience, to offer effective advice to a financial institution that is often desperate for a quick fix to a regulatory defect.

Ask yourself these questions:

(1) Precisely what are the qualifications of the staff members at the company that make the firm a good candidate to solve your compliance problems ? Government, regulator or law enforcement experience ?

(2) What about the company's track record in its prior engagements ? How did their clients fare ? 

Therefore, you must vet your proposed compliance adviser thoroughly, often using outside resources, to be assured that you are not engaging posers, companies whose advice will not solve your problems, although they promise to get your bank off restrictions; Let the bank beware.

My advice to the directors of Gibraltar Private Bank, sue your former external compliance adviser for damages, for malpractice, in the form of a negligence action. Don't blame your former president.