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Bank account looted after company placed in liquidation

Editorial Staff

There's a lot of talk about KYC when accounts are opened but a general lack of concern over accounts once they are established. The director of a company in liquidation has pleaded guilty to a fraud that could only have taken place because someone wasn't paying enough attention.

Paul Joseph Hanson, a former director of Wida Plumbing Supplies Pty Ltd, has pleaded guilty to one count of fraud. His Victoria, Australia company was placed into liquidation. Several months later, the company's bankers had left the company's overdraft in place and he still had control over the account.

So he made a transfer of a little over AUD124,000 to a family member who then gave him access to the funds.

It follows that the liquidator, for whatever reason, had not notified the bank of the liquidation and appropriate steps to prevent the operation of the account taken. That's one failure.

But there is another, wider, aspect: liquidations are matters of public record. Clearly the bank either does not monitor liquidations and reconcile them against account holders or, if it does, it does not do it properly.

There has long been a serious problem over those required to undertake KYC / CDD relating to their customers that it is largely "set and forget" at the time the account processes are followed. But in relation to dead companies, the risk has not only been known but highlighted for a very long time: in Nigel Morris-Cotterill's book How not to be a money launderer he tells the story of a small UK car manufacturer who sold cars paid for from an account, run by Russians, using the name of a company that had been struck off soon after formation for failing to file statutory documents, but not until after a bank account had been opened.

There are clear lessons to be learned, the first of which is that checking statutory notices against existing customers is an essential part of financial crime risk management.

 


 

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