Compliance officers who work at the British Columbia offices of TD Bank and National Bank of Canada must be asleep at their desks, for, according to a civil forfeiture suit filed in that Canadian Province, they permitted their banks to lend mortgage money to a well-known career criminal ( 4 felony convictions), who was engaged in money laundering through real estate transactions, and who is suspected of laundering $220m, which was the proceeds of crime. Or did these banks know about these details, but lent the money anyway?
Reports indicate that both banks lent money to Stephen Hai Peng Chen a/k/a Hoy Pang Chan, who has multiple felony convictions and no legitimate source of income, The civil forfeiture action accuses Mr. Chan of using drug trafficking proceeds to purchase real estate in Vancouver and Richmond, BC, in a money laundering scheme that involved two TD Bank mortgages and a national Bank of Canada Line of Credit. How on earth did compliance officers, who are required to conduct due diligence investigations on borrowers, and would have found Chan's extensive criminal record, approve this individual for loans ?
Apparently, when local journalists in BC sought to obtain comments from both TD and National Bank, their representatives hid behind "privacy reasons" and refused to either comment, or explain exactly how they could lend money to a money launderer. Canadian regulators would be well-advised to conduct extensive audits of both banks' BC operations, to determine if the banks committed additional violations of Canadian law, involving other customers.
Update: TD Bank reportedly sold those two mortgages to another lender. Is TD not liable for failure to disclose Chan's criminal history to the purchaser of those loans ?
* Calls were made to the Compliance Department of TD Bank head office at 55 King Street West in Toronto; however, the Customer Service representative of TD claimed she did not know the extension of the Compliance Department.
Chronicles of Monte Friesner - Financial Crime Analyst
Contributed by Kenneth Rijock - Financial Crime Consultant