Customer issues Court Proceedings against Bank after Personal Assistant spent USD 3.75 million on Credit Card
The Fraud
The Insured, a Middle Eastern bank, reported a potential exposure of c.USD 5 million after unauthorised transactions were made using a high-net-worth customer’s credit card.
The customer had told their personal assistant to cancel a supplementary credit card. Instead, she used the card without the customer’s knowledge to make cash withdrawals and purchases totalling USD 3.75 million.
The balance of the credit card was paid off each month. To do so, the personal assistant appended a forgery of the customer’s signature to the payment instructions, which the Bank then acted upon and debited funds from the customer’s current account.
Following discovery, the matter was reported to the police and the personal assistant was convicted.
The affected customer then brought a civil claim against not only the personal assistant but the Insured for repayment of the principal amount stolen plus damages and costs. The proceedings were issued against the Insured on the basis that they had been negligent in protecting the customer’s account from fraudulent activities.
Investigations
We obtained and reviewed significant responses and documentation from the Insured, including Arabic court papers and judgments, to confirm the circumstances of the fraud which spanned nearly a decade.
The personal assistant had been able to intercept bamaonsible such that no liability was attributed to the Insured.
Available information suggests that discovery for policy purposes arose prior to policy inception.
