| Damning Testimony: "Too risky not to do the due diligence" |
|
“Between 1991 and 1993, Amelia Grovas Elliott, a senior Citibank private banking officer in New York, managed the multi-million dollar transactions of Raul Salinas, the brother of then Mexican President Carlos Salinas. They involved deposits in a Swiss bank affiliated with Citibank and other institutions. The accounts bore false names used by Salinas to hide his identity. In 1994, Elliott testified as a star witness for the U.S. government in the money laundering prosecution of Antonio Giraldi, a private banking officer at American Express Bank International who previously worked for her at Citibank. The following are extracts of her testimony, before judge and jury, which helped convict Giraldi.” —moneylaundering.com
May 12, 1994
Q: .. (W)hat (are) your duties are as vice-president at Citibank? A: I head the Mexico team for the international private bank of the bank.... Since June of 83, so 11 years. Q: (W)hat your duties... in that position? A: I manage a team of 10 people with responsibilities... primarily to manage accounts for Mexican high net worth individuals. Q: How do you define a high net worth individual? A: Usually an individual who has a net worth of at least $5 million and that has liquidity of at least a million to invest with us.
Q: What is international private banking? A: Private banking is the area of the bank... that deals with clients with more money than the general public, that does it on a more white gloved kind of environment.... In the private bank of abank, you are a name. The person knows you, knows who you are, knows your family, they recognize your voice.... (I)t is basically a more personalized kind of banking relationship.... Q: ... (T)he laws which govern your conduct as an international private banker are the same laws that govern the conduct of bankers in the retail bank, commercial bank, the domestic private bank, they're the same laws, is that correct? A: They're the laws, the banking laws, correct.
Q: Is it reasonable to assume that bank officers...such as yourself who have extensive experience with international private banking clients in Mexico would be more likely to spot something improper or to have a funny feeling about a prospective client than a relatively inexperienced relationship manager? A: Yes.
Q: Are any of your international private banking clients concerned about the confidentiality of their holdings? A: Most of them are. Q: So that the Mexican government will not know? A: Not so much the Mexican government - I don't know. I have never asked the question of a client. It's not - the Mexican government can know. A lot of my clients have reported it to - when they took the money out and continue to report it now and pay taxes there. A lot of my clients have taken money back and then reported their entire holdings outside.... Q: ...With respect to the issue of confidentiality..., would it be safe to say that... one of the concerns of international private banking for legitimate reasons - and I'm not suggesting for a moment that you would do anything for an improper purpose - is to conceal the source or ownership of a particular client's funds from people who have no reason to know? A: Yes.
Q: What is your level of trust with Mexican authority, do you trust Mexican officials of any kind? A: Some, some not. Q: And how do you determine which you trust and which you don't? A: If you get to know them and -- I mean, it's fairly obvious, I think. Mexican officials are talked about a great deal Q: They have a history of becoming fabulously wealthy while in office, would you agree? A: Some.... Q: Does your team manage funds in some assets, regardless of the investment or the fiduciary vehicle, for former Mexican political leaders or their family members? A: No.
Mexicans of sudden, large wealth Q: ...(F)rom your decade or so of experience dealing with Mexico, are the people... who have the bulk of the wealth well-known in Mexico? A: Yes, they are. Q: Is it unusual for someone to appear in Mexico all of a sudden with a large amount of wealth that hasn't been previously known? A: It can happen, ... Mexico is a very big country but, but the people who hold the wealth, the bulk of the wealth of the country are not a handful, but a number that is -... manageable. And so, ... you have to either meet them or know of them or recognize the name. That is not to say there can't be others but, generally speaking it is a fairly tight and fairly small upper crust. Q: Have you ever accepted a client, heard of a client who said "I have $12 million I want to invest, but I have not had prior banking relationships?" A: No. Q: Have you ever in your experience..., have you ever had a situation where a wealthy person gave you control of $2 or $3 million without having met you? A: No.
Q: ...Are you aware of any specific statute or regulation in the U.S. which specifically requires a bank who is in the processes of accepting a prospective client... to do any particular amount of due diligence or to follow any specific steps before they can accept the client? A: I don't know if it's a statute. I don't know if it's a law. I just know that is the way we do things. Q: Precisely. Would you agree that the due diligence process developed - was developed by the banks to protect the banks? A: Probably.
Q: Would you agree that the objective of the due diligence or "know your client" policy is for the bank to achieve some level of comfort with a prospective client before accepting the client's funds and engaging in a banking relationship? A:
... It's too risky not to do the due diligence, not to know who you're
dealing with. Citibank's "methodology" Q: ...(I)n your... international private banking group..., how would a relationship manager learn that he or she had either cut a corner or shaved a little too close on the due diligence process after that had been brought to your attention? A: The relationship manager would be discussing the prospective client with his or her supervisor throughout the entire process.... (I)t's a complex kind of sale, so it has a fairly long, especially if you're not... in Mexico, it has a fairly long lead time. You would be discussing this with somebody else, for no other reason just to check yourself. "So-and-so referred this person to me. This person does this and this. I have got to visit that person." ... And then that person will say, "Well you do this." So that's... the methodology that we use. So by the time the client is accepted, all those things have been basically ironed out.... Q: ...(D)idn't you describe yourself as being terribly conservative when you were before the grand jury? A: .... When I was in front of the grand jury, I described myself as a conservative investor. Q: Conservative as an investor, inflexible as a -- A: Inflexible in the way I do things.... "Know Your Customer" as "part of the culture" Q: Now, when you hired Mr. Giraldi and when this "know your customer," "know your client," policy that you described was in effect, did you provide him with this information, train him aboutit and instruct him upon it? A: ... The "know your client," at least in our bank, is part of the culture. It's part of the way you do things. It's part of the way you conduct yourself. If you come in with a prospect and/or name of a prospect, you will be sure to be asked, "Who is this person, what do they do, who introduced them to you," by at least three or four people higher than you. It's just the way it is.... Q: And... your bank caused your international bankers to engage in extensive efforts to know your client before you accepted them? A: Yes.
Q: ...What's the purpose of having the bank officer verify the signature of the customer? A: The signature card is probably the most important document in a banking relationship because a relationship manager, such as what I do, knows the client and usually gets to know the client's voice, a client's signature, the client's everything.... Q: ...Now as part of this "know your customer"...policy, procedure..., is there a requirement to obtain bank references? A: We require two bank references.... Q: Did you accept oral references or did you require written references? A: We required written references.
Q: Is the "know your client" due diligence process, ... something that is ongoing and continuing or, once you have made the decision to accept a client, that's it, he's in or she is in and you never give your comfort level another thought? A: ... We visit our clients 10 to 12 times a year in their country. They come back three or four times to New York. We see the clients a lot. It's obviously a growing kind of thing and not just in knowing your customer as (to) make sure you know what's going on, but because the relationship can grow deeper the more you know this person. This is why we go to their homes, this is why we visit with their family, this is why we go to their business, this is why we remember birthdays. It just increases the depth.... Q: ...You said that one of the things that you try to do in getting to know your client and exercising due diligence and following up with your client is that you encourage your relationship managers to try to visit them at their home. A: At their home or their office, yes. Q: And another thing... that you said you liked your relationship managers to do is to get to know everybody in the family. A: Yes. Q: Everybody from the wife, daughters or sons, to sisters and brother-in-laws and things like that, correct? A: Sister and brother-in-laws if it's relevant, but certainly close members of the family, yes.
Q: Are you aware that there are people who find some attraction to Swiss bank accounts -- A: Yes. Q: -- or Swiss portfolios? A: Yes, yes, for confidential reasons. Q: Why do you believe that there is that perception or... feeling about something being special about Switzerland? A:
... (B)ecause Switzerland is known for having numbered accounts. Switzerland
is known for having... very strict confidential laws. Switzerland did
have some law changes in that --- and we have seen it --- in that they
will not maintain confidentiality anymore if there is a criminal reason
and/or they've been asked to provide information. A Swiss banker can,
in fact, be put in jail if they divulge the confidentiality of the name
of an account.... |