Asset Recovery: Would a Bank Lie? (Part 1)
A look at basic evasion tactics that some banks use to foil the efforts of asset recovery lawyers.
October 2016 | More Articles
This is part
one of a fascinating and controversial three-part series of articles examining a
question that is central to successful asset recovery: “Would a bank lie?” This
installment is focused on the simple but effective evasion tactics some banks
use in concealing their clients’ accounts.
To be clear,
Cachet International and its two principals do not provide legal advice.
We are asset investigators, not lawyers. However, in this article we will share
with you a few of our observations regarding the behaviors of some banks when
approached by asset recovery lawyers seeking to freeze and seize financial
assets. At the same time, we want to make it clear that we are not
suggesting that all banks follow deceptive practices such as those described
We have frequently seen lawyers and their employees approach
banks on the branch level to seek the confirmation of financial accounts, as
well as their freezing and seizure. In too many cases, the banks respond – at
least initially – that they have no record of such an account, the account
numbers are not correct, or they have never heard of such a person. Often this
happens even though precise and accurate information regarding these accounts
has been developed. Which leads to the previously posed question, “Would a bank
We will outline
some basic suggestions for dealing with banks in demanding account information.
While our suggestions carry no guarantee of success, they reflect our
experiences and observations over two decades of keeping a watch on bank
interactions. We leave it to you to decide whether banks lie.
Basic Evasion Tactics
One major U.S.
bank – which, after being found to be in league with major drug cartels, was
closed and bought by a larger bank – employed several basic evasion tactics that
many other banks have adopted as their evasion method of choice. The following
suggestions are offered as a way of defeating those tactics.
First of all,
it is not a good idea to make an “informal” approach or send
“advance notice” of intent to confirm, freeze and/or seize an account. As this
is not a formal request by the courts, many banks believe they are within their
legal rights to alert the account holder, move the account and, occasionally,
destroy or “misfile” the bank records. In such cases, it is reasonable to assume
an absence of “fair play.”
of taking an informal approach, it is advisable to make a formal legal
request at the bank’s corporate headquarters. Many bank branches have
standing instructions that they are not to confirm any accounts or account
holders – even in response to a court order. Rather, a court order must be
provided to the legal department at the bank’s corporate headquarters. (Note:
We frequently hear the lament, “I went to the branch where the subject account
was reportedly held, and they denied knowing about it.” In the bank’s view, it
did not lie. In fact, this is now so common that it is literally cliché.
Approaches to bank branches normally reduce chances of success and frequently
lead to accounts being moved.)
Third, a legal
request to the bank must include not only the name of the account holder
but also all of its variations, as well as the birthdate and any
possible identifying numbers. The now-defunct bank to which we alluded above
would insist on opening accounts in a variation of the account holder’s name.
For example, John Quincy Citizen would have an account opened under, for
example, “J. Quincy Citizen,” “J.Q. Citizen,” “Quincy Citizen,” etc. Therefore,
unless these variations were specified, the bank would not “recognize” the
account holder. That same bank also made a habit of “accidentally” changing the
month and/or year of birth, so that bank, if pressed, could even say, “We found
the same name, but the birthday appeared to be different and, therefore, we
could not confirm the ownership of the accounts.”
We should point
out that some banks will have slight “typographical” errors in the names of the
account holders. Clearly, for example, Slavic, Chinese and Arabic names have a
variety of ways of being transliterated into “English.” Therefore, the bank can
claim that it was “transliteration error.” For English names, during
registration it is common to omit an “e” from the account holder’s family name.
In some cases, we have seen that the name on the printed checks or the signature
did not match the relevant bank’s records. However, the routing and account
numbers on the checks were correct, and the checks were routinely cashed.
In this same
vein, we notice that many successful asset recovery lawyers ask for any and
all accounts owned or related by the subject, in all variants of their
names. Case in point, asking for only one singular account by identification
number can be perilous if the bank has some “challenges” in their bookkeeping
be prepared for missing taxpayer numbers on accounts held by business
entities. While some small businesses have accounts listed under the individual
owner’s Social Security number (SSN), most use the IRS-issued employer
identification number (EIN). However, it is not unusual to find that there is no
listed EIN for a company, which makes finding it in the bank’s database very
difficult. While it is a legal requirement in most U.S. states to have such a
number when opening a bank account, bank employees will often accept excuses
such as “I forgot to bring it with me today,” “I am about to apply for it but
need the account in a hurry,” etc. In each case, the account holder promises to
furnish the EIN in the near future but never does.
“oversight” often goes on for years and, oddly enough, most bank software seems
to “overlook” this deficiency. Critics claim that bank employees do this for
“good customers” in order to help them increase the secrecy of the account (and
avoid taxes). While that may seem hard to believe, we have a colleague who, in
his former position at the U.S. Treasury Department, issued hundreds of warnings
to banks and sent 16 senior bank officials to jail over a five-year period.
Those 16 officials made it a regular practice to open accounts for domestic and
foreign account holders without requesting and receiving their Social Security
numbers and/or U.S. tax identification numbers (EIN). In other words, the
absence of a Social Security number or, for companies, EINs is not an unusual
problem to encounter when trying to identify an account.
some states, such as California, banks will allow accounts to be opened with
only a passport and do not have to require a SSN or EIN. In short, account
searches by EIN and SSN are far from fool-proof.
recent years, we have seen an increasing number of cases in which some banks
claim that they cannot locate target accounts – even if furnished
the account numbers – and that is another obstacle that should be anticipated.
This is most common with “investment accounts” or “brokerage accounts” in which
the account holder has a Relationship Manager (RM). Some banks claim that only
the RMs have the details of these accounts, in which cases they do not seem to
show up in the bank’s central database. Further, the RMs sometimes use “internal
routing numbers” when accessing these accounts. When these critical internal
routing numbers are added to the account numbers, the banks often claim that
they do not have any accounts that match these numbers and, in fact, do not
even have account numbers that have the same number of digits. In a sense, they
are telling the truth, but they are also concealing the existence of accounts
that they actually know to exist.
In other words,
many banks are looking for excuses not to identify their account holders or
Lawyers new to
asset recovery ask the question, “Why would a bank do this?” or “Why would a
bank take such a risk for relatively small accounts?”
Three of the
most common reasons heard over the years are as follows:
First of all,
“small” account holders add up, and, for many banks, those accounts are their
lifeblood. Banks not only want to keep individual account holders, but have a
reputation for “confidentiality” that encourages new account holders and retains
the current ones.
chances of someone pursuing the bank and convicting them of obstructing justice
or another offense are rather small. Bankers rarely go to jail and, even though
many banks pay billions of dollars in fines every year, they still have higher
profits than losses. Further, most persons seeking to recover funds are not
willing to pay out the large legal fees to prove that the banks intentionally
sought to obstruct justice. Even then, the banks have lawyers on retainer and a
multitude of ready excuses to claim that the “error was unintentional.”
Third, many of
the legal demands on the bank are not drafted thoroughly and encompassing enough
to deny the bank a variety of methods to attempt avoiding compliance.
continue to note that, in asset recovery, “experience counts.” Obtaining expert
legal assistance from experienced asset recover lawyers in drafting demand
letters and approaching financial institutions is a cost-saving measure.
article will discuss more advanced evasion tactics practiced by banks and other
To discuss a corporate intelligence or financial
investigation matter, or to learn more about Cachet Internationals
investigative resources in your jurisdiction, contact
Michele Palmer by
email or at
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