When Willie Sutton was asked why he robbed banks, he replied “because that’s where the money is.” It seems that not much has changed in almost eighty years.
JPMorgan Chase & Company (NYSE: JPM) said on Monday that it has sued a former executive who was arrested on criminal charges last year in South America.
Hem Arbizu, a former vice president of JPMorgan, was arrested in Argentina last year after being accused of stealing $2.8 million from a customer’s account. He was in charge of serving wealthy clients in Argentina and Chile. The firm fired Arbizu on May 30, 2008, and reimbursed the customer.
JPMorgan has accused Arbizu of arranging for funds to be wired to a customer account at UBS AG (NYSE: UBS). During difficult economic times, there tends to be an increase in crime – so, what is most concerning is that this crime was perpetuated for so long without being discovered, which should make customers scrutinize their banks statements even more than usual. Trying to recoup the funds is secondary for the firm, what is more critical is ensuring there were no other participants, and the flaws in the system that allowed for this breach are corrected.
Throughout history, banks have been fraught with crime and fraud. Usually though, it is limited to tellers cash drawers coming up short, leading bank branches to fire many, assuming the tellers have been stealing from the firm. But, in the digital world we now live in, apparently you do not need to be physically in a bank to commit such fraud, as Mr. Arbizu has proven. With the rise of money wires, moving cash around the globe is easier then ever, so firms will need to tighten policies to ensure such activity is not emulated elsewhere.
