Financial criminals who utilize counterfeit financial instruments; such as, bogus US bonds, high-value counterfeit currency notes, bank deposit receipts and account statements, among other ersatz documents, continue to borrow against such worthless paper, from both private, as well as professional lenders.
Unfortunately, unless financial professionals conduct sufficient due diligence to rule out instruments as bogus, lending against garbage collateral will continue to occur, with obscenely high losses. We wonder why bankers, or private financiers, frequently fail to assign verification of assets queries to their compliance officers. Is it simply negligence, a wish not to offend the client, a busy schedule, or a case of really just not willing to risk cancelling what appears to be a lucrative, high-interest rate loan ?
In any event, when bogus financial instruments, which are either clever counterfeits, or documents were never sold in such form, by official issuers, such as bonds, result in the extension of credit, but which are never repaid, legitimate borrowers are denied access to those funds, and the financial community as a whole loses.
Therefore, when any instrument is offered to secure a proposed sizable indebtedness, by all means, vet the documents thoroughly, especially when you have no personal private experience with them specifically. It may be best to presume that presume that they are not genuine until you can validate them, through a trusted source. This is especially true for private lenders.
Chronicles of Monte Friesner - Financial Crime Analyst
Contributed by Kenneth Rijock - Financial Crime Consultant