The failure to participate in investigative due diligence
may directly impact your business for the worse. For the State Bank of India (SBI), this was the case, not only losing millions of rupees but discrediting the public sector bank entirely. Know Your Customer (KYC) should be of the utmost importance for businesses and, especially, for the banking sector. The SBI was deceived, hacked and, consequently, embarrassed when a film crew funded their production through fraudulent activities. So how important is Customer Due Diligence (CDD)?
White Screen Productions (WSP) is a small production company in Chennai, India, and managed to acquire funds estimating to Rs 3.29 crore
. Through the use of fraudulent methods via an auto loan counsellor who supported WSP in its deceitfulness. For those who are not familiar with 'crore' it is, essentially, 1 crore = 100 lakh and 1 lakh = 100,000 Rupees (Rs 100,000). Thus, 3.29 crore is the equivalent of Rs 32,900,000, which, when converted to euros is around, â‚¬391,280. But how did this small-time production company swindle their way to riches? According to the SBI, 13 relatives had independently submitted applications, via D.Chitra (an auto loan counsellor for purchasing luxury cars) for loans to buy new cars. Yet, through fraudulent methods, Chitra managed to hack the URL of the Loan Originating Software, misusing her position entirely. She was able to process and sanction loans without the knowledge of the banking officials. Moreover, the funds were all re-routed to the bank account of V. Esakkiraja, an actor and producer of the film, 'Aruva Sanda'. Not one dime of the illegally acquired intake was spent on buying luxury cars, but instead, it went towards the financing of producing a film.
Eventually, through routine checks, abnormalities were found in the loans sourced by Chitra. Through in-depth investigations, it was evident that she had managed to hack the Loan Originating Software. The SBI took legal action and filed a civil suit. Conclusively, a declaration was sought from the High Court, understanding that the SBI was entitled to have a 'first charge' from the sale proceeds of the movie. The investigations were not only time-consuming but costly too. Through a poor CDD investigation, the State Bank of India was duped. Therefore, it is pivotal for the banking sector to enact professional and thorough inquiries into their customers in order to stamp out fraudulent undertakings.
offers impeccable investigative due diligence reports
that can help your next business arrangement run smoothly. Connecting the dots and providing a professional service that allows you to accurately know your customer. It is not worth taking shortcuts to save some money, when, if your company is in the face of 'bad business', the consequences are assured to be more costly. Not only financially, but damages to your reputation, which could be irreversible, are at stake when you do not take the correct precautions. At Cedar Rose, the reports available are not only extensively detailed but easy to read and come in a variety of specifications. Whether you need a report for a courts record search or an overall litigation check, Cedar Rose may have the solution for you.
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*** The sole purpose of the article above is to generate public discussion, it has no intention to constitute legal advice. ***