A new customer recently came into the bank to open a personal account with us and also referred another stockbroker friend of hers to open a new irrevocable trust account with us as well (which the new customer is not on that account). Our new customer was a previously extremely well known Beverly Hills stockbroker but was kicked out of the brokerage industry due to fraud etc. She practically came in with an elderly long-time shareholder of ours that we know very well when opening her account and the stockbroker friend’s account. ChexSystems gave us a DECLINE recommendation in regards to opening the personal account due to the customer’s past account abuse at other banks. Unfortunately, our account opening employee did not follow procedures to get approval before moving forward. However, since this new customer was with this long-time and highly respected shareholder of ours, I’m afraid it would have been difficult to turn her down right then and there even if the employee had followed procedures (something I will need to address later outside of this immediate issue).

The decline recommendation is what led us to do more research on the customer. It is unknown to us if our elderly shareholder customer who brought the new customer into the bank is or isn’t aware of her reputation but we need to know if/how we have any latitude to alert our elderly shareholder customer to avoid her of potentially becoming (one of) her next victims. They may very well only be friends for all we know, but I am leaning on the side of caution. I have other procedural issues to address here obviously, but my primary concern at this moment is our elderly customer and after reading up on the ex-stockbroker I have become concerned for our customer since we don’t really know a lot about her financial situation other than I think she has had depository accounts here with us since close to the time we opened. She is a regular at our annual Shareholders Meetings and has always struck us as a smart, savvy self-made business person.

We made the decision to go ahead and close the accounts that were recently opened due to the ChexSystems recommendation and due to our recent research which informed us about her being kicked out of the brokerage industry and all of the negative information surrounding that, and of course due to account abuse at other banks she has previously banked at.

We are unsure how to proceed with our elderly customer or what is okay to disclosure to her, if anything, etc. At this time, no unusual transactions have occurred on the accounts at all. I see no reasons to file a SAR necessarily at this time either.

I’m unsure if we should say something to our elderly shareholder and what is appropriate to say.

Thanks for any help here.

You have nothing but suspicions. I would not put the bank into a position of communicating conjecture about a former customer of the bank to another current customer of the bank. If you had enough suspicion to suspect elder abuse, then your avenue is your State elder abuse process.