The Fraud Examiner

Banks Are Businesses Too: Look Beyond the Usual Suspects When Subpoenaing Bank Records

Michael Loughnane, CFE, CAMS

President/Owner - Loughnane Associates, LLC


When investigating potential frauds, examiners often use financial institution records. While they can be of great value to an investigation, I have also seen cases where the information called for is too limited in scope and may not reflect the true nature of the subject’s business with the bank.

We know that banks hold and manage documents such as signature cards, account statements, etc., but have you considered delving into the business process of a bank? This is information that is necessary for them to conduct business and extends well beyond account information. It could include records of telephone conversations, internal bank emails, as well as meetings and discussions. These documented communications or decisions by personnel and higher-ups could have an impact on client accounts. During a fraud investigation you might subpoena this type of information, so why think of banks data differently?

In the movie “Casablanca,” Rick Blaine (Humphrey Bogart) shoots Major Strasser, the Nazi officer who is about to stop the plane and capture Lazlo, a resistance hero. Rather than arrest Lazlo, the police Captain Louis Renault (Claude Raines) turns to his officers and tells them to “round up the usual suspects.” This action may have the appearance of being effective but obviously will not lead to the true killer. Similarly, in a bank subpoena, gathering traditional bank records will round up the “usual suspects” and produce some results, but leave records that might be even more informative and productive undisclosed.

 Banks Are Profit-Oriented Businesses

It is important to keep in mind that financial institutions are profit-oriented businesses and contain separate business elements for service, operations and support. An investigator should realize the inherent conflict between the business of banking and law enforcement — banks constantly balancing their risk in a business to maximize profit against their regulatory obligations and cooperation with law enforcement with differing objectives of compliance and prosecution.

Consider if one of a bank’s high-value customers engages in a possibly suspicious transaction that could be very profitable to the bank. As they assess the activity the bank will likely consider the value of the customer and account, the potential profit in the transaction, and the impact to the bank if they refuse to participate including the possible loss of the client. If the perceived value outweighs the risk of penalty of noncompliance, they may choose not to file a Suspicious Activity Report (SAR). Without a SAR, information that might trigger an investigation may not come to light, however the data and deliberative process may remain in routine bank business records. 

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