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April 22
A Banker's Guide to Virtual Currency
Andrew Beal

April 24
BSA/AML Compliance: Writing the SAR Narrative
Ken Golliher

April 29
HSA Basics
Whitney Johnson

April 29
Required Training for Loan Originators
Mary Beth Guard and Jack Holzknecht

May 13
Overdraft Practices in Today's Regulatory Environment
John Burnett

May 14
Reg E Claims - Allocating Liability Correctly
Andy Zavoina



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#1823555 - 06/14/13 09:41 AM Trustee Breach of Trust
MDShoregirl Offline
New Poster

Registered: 10/29/08
Posts: 21
We have a situation where the trustee of funds for "beneficiaries UTW of" is using the funds for his personal benefit. The beneficiaries are adult aged but still under the age of 25 which is the age limitation stipulated in the will. They live in another state. My gut feeling is that we need to file a SAR but I'm stumpt as to what to pick on the SAR. The most likely is "Embezzlement/theft/disappearance of funds". This doesn't exactly seem to be a BSA issue. We have consulted the bank's attorney who told us that we are under no obligation to contact the beneficiaries and that a SAR was a management decision. I'm a bit concerned about doing a SAR because it places us in the position of confirming we have "knowledge" of the activity. It's also a lot of money so it's a foregone conclusion that we will have ongoing activity. Other thoughts and opinions on the matter would be great before we proceed!

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BSA/AML/CIP/OFAC
#1823559 - 06/14/13 09:48 AM Re: Trustee Breach of Trust [Re: MDShoregirl]
Matt_B Online
Diamond Poster

Registered: 09/06/11
Posts: 1131
Loc: Iowa
Sounds like a financial crime to me, and by filing you are confirming suspicion, not that you are specifically aware of what's happening.

I think you'd have a lot harder time justifying why you didn't file when the beneficiaries find out and want to sue that you will justifying why you should file.

As far as what you could consider it, I would think perhaps fraud could be considered, embezzlement, misuse of position (maybe?), and/or the always helpful Transaction with no apparent economic, business, or lawful purpose.

Some of those might be a stretch, but I'm sure others could offer opinions on them as well.

In summary, I would file.
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#1823575 - 06/14/13 10:12 AM Re: Trustee Breach of Trust [Re: MDShoregirl]
rlcarey Offline
10K Club

Registered: 07/16/01
Posts: 48549
Loc: Galveston, TX
"We have consulted the bank's attorney who told us that we are under no obligation to contact the beneficiaries and that a SAR was a management decision."

Now that you are in a position of suspected knowledge, you might want to find a new attorney. US Bank is going through something similar right now.

http://www.lexisnexis.com/community/bank...nzi-scheme.aspx

Whether successful or not the beneficiaries are going to come after the bank if they think you had a hint of knowledge.
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The opinions expressed are my own, take them or leave them.

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#1823609 - 06/14/13 10:52 AM Re: Trustee Breach of Trust [Re: rlcarey]
Ken_Pegasus Offline
10K Club

Registered: 08/30/01
Posts: 16674
Loc: Another trip around the sun
Write the SAR narrative and then go back to decide which boxes to check based on what you have said; this is no reason to delay filing. If there was a time when a bank could rationalize not reporting a crime against a customer, that time is long past.

As for notifying the beneficiaries, I'm not aware of any federal law or regulation that would require you to do it either. However, there is a stack of court decisions that have fixed liability with the bank for failing to act on such information. (In the beneficiaries' position, I would most assuredly sue you if you knew and did not inform me.) I acknowledge that it's a mine field, but sometimes you either cross the mine field or you lose the war.
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We are Boston. We are America. We respond. We endure. We overcome...and we own the finish line. Joe Biden

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#1823613 - 06/14/13 10:56 AM Re: Trustee Breach of Trust [Re: Ken_Pegasus]
Retread Offline
Diamond Poster

Registered: 10/31/03
Posts: 2470
Loc: Southeast
I agree the SAR should be filed. You should also look at this article and follow the link to the case.

Bank Not Liable
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#1823619 - 06/14/13 11:04 AM Re: Trustee Breach of Trust [Re: Retread]
Ken_Pegasus Offline
10K Club

Registered: 08/30/01
Posts: 16674
Loc: Another trip around the sun
It's a good article, particularly the last paragraph. Just as it suggests, I would make a dramatic distinction between a bank that "knows" of a fiduciary breach and a bank that doesn't.

At a minimum, the beneficiaries are entitled to an accounting from the trustee. Your new attorney could devise a process under which you provide them with copies of cancelled checks... Then, you could hope that any court involved would consider the article linked and hold you harmless for the money that has been stolen so far.
_________________________
We are Boston. We are America. We respond. We endure. We overcome...and we own the finish line. Joe Biden

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#1823752 - 06/14/13 01:47 PM Re: Trustee Breach of Trust [Re: MDShoregirl]
MDShoregirl Offline
New Poster

Registered: 10/29/08
Posts: 21
Thanks for all the good information! You've confirmed my thoughts on this!

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#1823764 - 06/14/13 02:12 PM Re: Trustee Breach of Trust [Re: MDShoregirl]
Kathleen B Online

10K Club

Registered: 12/27/00
Posts: 16553
This thread should be required reading.
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CRA/HMDA Maps,Analysis,Consulting,Geocoding,Compliance Services

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#1824601 - 06/18/13 01:08 PM Re: Trustee Breach of Trust [Re: Kathleen B]
Retread Offline
Diamond Poster

Registered: 10/31/03
Posts: 2470
Loc: Southeast
This isn't new, but it may be worth reading.

Regions Bank Lawsuit
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Politicians are like diapers. They need to be changed often and for the same reason.

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