Law firm Meredith Connell has leveled accusations against the state-owned Kiwibank, alleging its failure to detect suspicious or illegal activity after a branch manager facilitated a scam victim’s transfer of her $300,000 life savings to fraudsters.
The substantial transfer, purportedly an investment in Australian Government-backed Barclays Bank bonds, occurred merely four months following a public warning by New Zealand’s Financial Markets Authority (FMA) about a counterfeit Citibank investment scheme.
According to disclosures made to legacy media NZ Herald the victim provided the Kiwibank manager with printouts of documents sent by the scammers, including a payment invoice indicating that funds for the supposed international investment were being directed to an ASB ‘fast saver’ account in Whanganui.
The victim alleged that the manager processed the payment without scrutinising the nature of the transfer, the legitimacy of the recipient, or the potential for fraudulent activity. ‘She basically said, ‘Sign it’ and stamped it, and that was it,’ she told the Herald.
The repercussions of losing her life savings have been profound, causing the victim significant physical and emotional distress. ‘I’m on anti-anxiety medication. I can’t work. What have I got to look forward to? It’s devastating. That was my future, comfortable retirement. There’s no way I can get that money back,’ she said.
Choosing to conduct the transfer in person under the assumption of enhanced safety measures, the victim expressed shock and disbelief that such a substantial sum could be transferred without triggering suspicion from trained bank staff.
Despite her efforts, none of the stolen funds have been recovered. Consequently, the victim has filed a complaint with the Banking Ombudsman, who has initiated an investigation into the matter. Additionally, the victim has enlisted the services of law firm Meredith Connell, which penned a letter to Kiwibank in October outlining allegations of negligence.
Stephanie Cann, an associate at Meredith Connell, asserted that Kiwibank failed to recognise red flags or conduct adequate due diligence before processing the payment, despite prior awareness of the scam. Cann contended that Kiwibank should have probed more deeply into the transaction to ascertain its legitimacy.
When approached for comment, Kiwibank declined, citing the ongoing investigation by the Banking Ombudsman. However, in correspondence with Meredith Connell, the bank defended its actions, stating that standard procedures were followed and attributing the oversight to the challenge of distinguishing between fraudulent and legitimate transactions.
A subsequent investigation by the Herald uncovered that the individual whose ASB account received the stolen funds faces charges of money laundering in connection with seven victims, totaling losses of approximately $1.5 million.
The victim, a woman in her 60s, had recently sold her house and sought to invest the proceeds for retirement. Initially contacted by a scammer impersonating a Citibank investment adviser, she was misled into investing $300,000 in what she believed were government-backed bonds.
Despite the FMA’s prior warning regarding Citibank investment scams, the Kiwibank branch manager allegedly proceeded with the transaction without raising concerns or conducting further inquiry.
Months later, when attempts to contact the purported adviser proved futile and inquiries to Citibank revealed no investment account in her name, the victim realised she had fallen victim to a scam.
Now grappling with financial uncertainty, the victim hoped the Banking Ombudsman would hold the banks accountable for their alleged lapses in security and due diligence. ASB, implicated in harbouring the ‘mule account’ used for money laundering, also declined to comment, citing ongoing legal proceedings.
The alleged mule is due to appear in court next month.
Yeah, its time these banks were held to much higher standard over this sort of thing, as is the case in other nations.
Not really a surprise when some branches of banks don’t even accept cash. Any bank/business that is not willing to accept physical legal tender in this country should be forced out of business.