AML./CFT: Bank boss pleads guilty to money laundering
When New People's Bank was formed in Virginia, USA in 1998, the "President and CEO" was Kenneth D Hart. Hart, now 63, has pleaded guilty to insider dealing and money laundering using customers' information to enrich himself.
The bank was formed by Hart and his friends and family. Hart put in place training for the board and staff relating to insider trading. But he used information coming into the hands of the bank to make a personal profit for himself and conspirators.
The case has special implications in relation to improper use of information passing up the internal reporting systems within financial institutions - and goes beyond the simple facts of the case.
In one case, a customer visited a branch office and said he intended to spend USD6 million on shares in New People's Bank. He wanted to buy a block of half-a-million shares and would pay USD12 per share.
The company's internal policies required large transactions to be passed through a reporting system.
Hart became aware of the proposed purchase.
Hart had someone as yet not named open an account in the name of F.D. Owens, Jr. Investment Account.
It appears that the opening of this account may have been performed without AML / CFT CDD.
Money was paid into that account by the bank when it received money from the customer.
Then the money from the F D Owens account was used to pay out Hart and his family in respect of the shares they owned.
In this way, his family members were able to benefit from the information as to the price the customer was prepared to pay and his offer did not go out to the wider shareholding population; also the family was able to ensure that they received the maximum that the customer was prepared to pay.
Hart resigned from the bank in May 2009. He will be sentenced in due course.
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