WHISTLEBLOWER HELPED SCUTTLE BANK HANDLING GAMBLING TRANSACTIONS
24th September, 2013 at 04:53:57
SunFirst's compliance officer did her duty despite pressure.
The news earlier this week that US federal agencies, the Federal Trade Commission and the Department of Justice, had divvied up seized profits from allegedly illegal gambling financial transaction activities at Utah's SunFirst bank (see previous report) has been followed by an interesting story on how a whistleblower within the company assisted federal authorities.
SunFirst's compliance officer Cathy Scharf made the revelations as a speaker at the Association of Certified Anti-Money Laundering Specialists conference in Las Vegas Monday.
The Associated Press news agency reports that her disclosures concerned some $200 million being illegally processed by SunFirst for US players at major online poker websites like Full Tilt Poker and PokerStars.
Despite her job as compliance officer requiring her to keep the bank on the straight and narrow, Scarf claimed that she was pressured by managers, who told her the bank would fail without the illegal income, and even brought in criminal lawyers to threaten her with arrest if she breached confidence on affairs at the bank.
"Scharf ultimately worked with federal regulators to expose SunFirst Bank's partnership with the [online poker] sites," AP reports. "She said other banks may also be caught up in similar offshore gambling operations."
Scharf realised what was going on at the bank shortly after she was hired in the depths of the economic recession.
She told delegates at the conference that the small Utah bank was making $400,000 a month in transaction fees, violating a 2006 federal law titled the Unlawful Internet Gambling Enforcement Act that makes it a federal crime to knowingly process payments for illegal internet gambling.
With the support of colleagues, she hired a lawyer, started a diary of her difficulties in fulfilling her responsibilities, and began working with federal authorities.
In 2012, the bank's vice chairman went to prison for his role in the scheme.
Others in the industry credit Scharf with spurring a raft of new policies, including increased attention to these kinds of operations by the Federal Deposit Insurance Corporation.
"She stopped potentially hundreds of millions of dollars that were coming through that bank, and she tightened up the industry as a result," Daniel Wager, head of due diligence at TD Bank in New York told AP after Scharf's address.
Related News Tags: Las Vegas, Full Tilt, Pokerstars, Expo, UIGEA