Tort Claim Highlights Need for Careful Examination of Bank Employee Conduct
In a recent decision, the Swiss Supreme Court has emphasized the importance of scrutinizing the intentional conduct of specific bank employees when it comes to tort claims involving money laundering and internal fraud.
Identifying Responsible Employees
The court’s ruling highlights the need for plaintiffs to identify the individuals responsible for committing acts of money laundering or other fraudulent activities. These individuals typically hold supervisory positions and decision-making authority within the bank.
To establish a successful tort claim, plaintiffs must demonstrate that these employees committed an act of money laundering wilfully or recklessly, in violation of anti-money laundering laws and regulations.
Detecting Fraud
Banks can detect fraud through various means:
- IT surveillance systems that identify suspicious transactions or high-amount money transfers.
- Market downturns and unexpected losses that prompt close examination of risky investments or imprudent lending practices.
- Direct reporting by clients, employees, or auditors.
Consequences of Discovery
When a bank discovers internal fraud, it typically initiates an internal investigation to assess the scope of the fraud and identify the individuals involved and affected clients. If the investigation confirms the occurrence of fraud, the bank may consider filing a criminal complaint against its employee(s) and claiming plaintiff status.
In some cases, banks may indemnify their clients without discussion, but this is rare. More often, the bank will argue that it is the victim of its own employee and contend that the client’s lack of diligence allowed the rogue banker to continue perpetrating fraud.
Practical Considerations
When a client discovers fraudulent activities in their account, they should act swiftly to challenge the transactions/operations on their accounts. This may involve interrupting the statute of limitation if the fraud was perpetrated over a long period.
Once these urgent actions have been taken, clients’ counsel should establish a strategy to maximize recovery chances by working with lawyers from other jurisdictions and analyzing the advantages of each jurisdiction for the claimant.
Leveraging Global Strategies
Large fraud cases often involve multiple jurisdictions due to the use of offshore companies, trusts, foreign life insurance, and payments wired in foreign countries. In these situations, it is crucial for lawyers from each jurisdiction to collaborate and establish a global strategy to recover losses.
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