CBC Go Public’s story about Robert Hogg highlights the prevalence of fraud against vulnerable Canadians and the extent to which a bank will make inquiries in the face of unusual transactions on behalf of a client. The story indicates that the father provided a consistent reason for the transfer of the funds and as a result, the bank complied with the requests. As with many other cases, once bank accounts were drained, then the client asked for funds to come out of investment accounts (often where larger sums are held). We do not know whether the withdrawal of investment funds were identified as red flags, or whether the investment dealer inquired as to the reason for the withdrawal in order to better understand why the funds were needed, or had a discussion with the individual to determine whether the client understood the consequences arising from the withdrawal (for example, the tax implications, and implications for the investment objective of the account).
Among other things, this story highlights the need for more awareness of the types of scams being perpetrated on Canadians and such scams being raised with a client when they ask to initiate an unusual transfer. Best practices in other jurisdictions such as providing a bank client with a one pager that describes common types of scams when a wire transfer is requested may help trigger awareness on the part of the customer or provide the bank staff with the ability to ask more follow up questions. In addition, the ability of bank personnel to delay processing the transaction until further inquiries are made including by reaching out to a trusted contact person that is on file (so long as that person is not suspected of being involved in the financial exploitation), may lead to the ability to uncover the fraud. If the son had been designated the trusted contact person by the father, the bank would likely have learned from the son that the father did not own any property in Malaysia and was unaware of any house being built. Necessary amendments to federal privacy legislation to permit such inquiries should be also be a priority.