Due to their business model FBME Bank used a vast network of introducers, service providers, agents, tax advisors and other affiliate partners to guide customers to the bank. The bank has a strong focus towards very specific customers; high net worth individuals and offshore companies. Both target groups have an interest in tax efficient banking solutions. Unfortunately, it sometimes happens that dubious customers find their way to such a financial institution as well.
The house of cards of FBME Bank started to show its first real bursts in 2002/2003.The bank lost its license in the Cayman Islands and had to relocate. FBME failed to comply with capital requirements and had no substance and presence in the Cayman, a typical example of a mailbox firm.
The acquisition of a banking license in Tanzania was quite easy by a takeover of Delphis bank. This bank was placed under resolution by the central bank of Tanzania (BoT) after a Kenyan business man, who owned the bank, defrauded a number of investors and was accused of fraud.
This information, including the technological, economical and geographical position of Tanzania should have raised a number of questions by introducers. On the contrary, many just introduced hundreds of customers to the bank. It’s an interesting fact and one in legal practice that presents leads and clues. A payment for services creates a liability when the presented service does not provide the quality one can expect. Making an introduction to a bank that goes down while the introducer should have done his due diligence got an even more interesting turn in the cases of feeder funds that introduced customers or made investments in the Ponzi scheme run by Bernard L. Madoff. US court forced PWC and Fairfield Greenwich Group to settle with the liquidator in their case against the Ponzi scheme. PWC settled for 55 million USD and Fairfield Greenwich for 80,3 million USD.
In short it means that your introducer can be held accountable for the introduction made by the lack of doing proper due diligence. This information was available back in 2002 and 2003 already and therefore your introducer is liable for additional losses you experience. Also, this is something to consider at the end of the liquidation, once FBME Bank is fully closed and there is no chance for further asset recovery. A personal liability can be the result of the closure or liquidation of the company of the introducer and therefore you have a realistic chance to successfully file a claim with your introducer when the time is there.