A Matter of Compliance

It was late in the morning when Norbert Schneider, Head of the Bad Loans Department of the X. Bank called to tell me that he was coming over with Frederic Steiner (nicknamed ‘Freddie’), the Bank’s compliance officer. The Bank was an important client of our firm. Further, Norbert and Freddie were friends of mine. This, of course, did not mean they were in one another’s good books. Despite their ostensibly amiable modus operandi, it was easy to spot the underlying antipathy. I had had pleasant luncheons with each. But never had they called on me together. ...

1. Hendra’s Latest Misdeed When Norbert and Freddie arrived, the former was out of breath. Notwithstanding his energetic and imposing bulk, he found it difficult to keep up with Freddie’s youthful speed. In addition, Norbert was badly shaken. I suspected the two had had a row. My fears, though, were allayed when Freddie asked Norbert to raise the problem they had encountered. My heart sank when Freddie said, impulsively, “Curse that bastard Hendra; what a Schweinehund!” ...

1. Vanishing Ink “Well, what has Hendra done now?” I wanted to know. “It all relates back to the consolidation of his accounts. You see, Peter, we have just received a remittance of S$500,000.” “Why not set the amount off against his debt?” “He has further instructed that S$400,000 be remitted to a numbered Swiss bank account. If we do so, the debt remaining after the consolidation and the remittance to Zurich will be some S$250,000,” advised Freddie. ...

Heaving a sigh, Freddie raised the issue of the funds remitted and Hendra’s order to pay out a substantial part forthwith. Bearing in mind Hendra’s nefarious conduct, Freddie suspected that the case might involve money laundering. A few years earlier, the issue would not have been a cause for concern. A bank’s function was to receive amounts payable to its customer and to execute his payment instructions if he had the requisite balance. The position changed in the wake of terrorist activities in the United States. Under American pressure, many governments in the Western World passed laws under which a bank was expected to freeze amounts suspected of coming from dubious sources and to notify the reserve bank. The funds would be unfrozen only if cleared by it. ...

1. My Contacts My contact was a former employee of our firm. When I had completed my narration, she pointed out that the matter was within the jurisdiction of another department. She didn’t wish to cross wires with them. Still, she rang up her counterpart in that department. To my pleasant surprise I recognised the incumbent. She had been one of my favourite students some twelve years earlier. At that time, she had been in her twenties; and she still looked the same. ...

Back at the X. Banks premises, Norbert told us the he had examined the transaction and was satisfied it was an ordinary trade deal. In the circumstances, we decided he could go ahead. Both Freddie and I felt relieved. At 4 pm, Norbert rang up Hendra. He confirmed the receipt of the funds but added that the bank had exercised its set-off. In consequence, the account balance was well below the amount Hendra had ordered the Bank to remit. ...

1. Part Payment The Hendra affair did not disrupt my good relations with Norbert and Freddie. And strangely enough, the tension between them eased. In a sense, the affair brought them together. Hendra remained a thorn in the Bank’s side. On quite a few occasions, as I passed by the building housing the Bank, I saw Hendra proceeding happily on to Collyer Quay. I had no doubt that, on each occasion, he had managed either to extend or to replenish his overdraft. ...

A few days later, Hendra advised that a settlement had been reached. He had met Norbert and Freddie and, after some haggling, gave them a cheque for S$100,000. He was pleased with the arrangement. A chat with Freddie confirmed that the Bank, too, was satisfied. In due course, I invited Hendra for lunch. My object was to find out what had induced him to settle. After all, the Bank was unlikely to issue a writ as long as the balance remained steady. ...