Introducing a bank account: Reason and liability

Sometimes, it becomes difficult to open a bank account in a new place where you do not have anybody to introduce you. Introduction from an account holder is mandatory for opening a new bank account. The same provision existed in neighbouring India but was later relaxed in 2012. Banks in Bangladesh are reluctant to deviate from this instruction of the central bank even though documents of identity and address as required are provided.

Investigations on the Nine Eleven incident in the USA revealed that the arms and monetary supplies to the terrorists were routed through some banks; but the banks concerned could not provide appropriate details of the account holders. Then a norm called Know Your Customer (KYC) was introduced to make sure that the banks have the address and identity of their customers. The Money Laundering Act-2012 further binds the terms of taking the KYC of every customer. In addition to taking KYC banks in Bangladesh introduced the system of introducing any prospective customer by an existing customer of the bank to be satisfied that the information given by the new client is correct. This system is an important check card against fraudulent activities, money laundering and financing for terrorism. Taking such introduction is a safeguard for a banker to get privilege in the eye of law as well.

Now the questions come up-- what are the responsibilities of an introducer and to what extent he is responsible in case of any crime committed by the account holder he introduced. The general presumption is that the new customer is well-known to the introducer, and in case of any wrong committed by him, the introducer will be liable. Following that presumption a trial court in India convicted an introducer Mr Das to three year imprisonment for introducing Mr Acharya who by fraudulent means withdrew a big amount from a bank and fled.  The High Court upheld the conviction but reduced the sentence to six months. But the Indian Supreme Court cancelled the earlier verdicts observing that Das had introduced Acharya to the bank only for opening an account and "that by itself does not spell out any fraud or cheating."

After that landmark judgment by the Indian Supreme Court, it becomes clear that, an introducer, without other evidence, could not be held liable for a fraud played on the bank by an account holder. So, an introducer's liability is now limited. The banker seeks from the introducer a comfort level about the person being introduced. It should be noted that the introducer has only a moral responsibility. He cannot be sued or otherwise taken to task if the person he introduced turns out to be an undesirable person. His liability is likely to identify the client and client's residence if required by the bank.  Nevertheless, by virtue of the said verdict, an introducer having mens rea (guilty mind) at the time of introducing to a fake person cannot escape from the eye of the law and he may be held liable if any cheating occurs subsequently in his introduced account.  

The writer is an officer in a

private bank.

zakaria.advocate@gmail.com