A customer had a bank account in the Mumbai branch. The bank noted that the customer, an Indian resident, was living in London and regularly transferred funds to foreign accounts. He used his email (Yahoo account) to sen

The Forensic Auditor first looked into the procedures required at the bank for transfer of funds to an account abroad. The main aspects involved were: Written request was to be received from the customer, if not so, through a digitally signed document. For any transfer of funds abroad, FEMA requirements are to be completed, including submission of Form 15CB under the Income-tax Act, 1961. Either a self-declaration of the customer was sufficient or a Chartered Accountant's certificate is required. Funds have to be transferred through electronic mode like SWIFT. When the Forensic Auditor tracked the funds which had been sent to an account in Hong Kong, it was found that the fraudster had closed the account and the Hong Kong bank disowned any liability, since it was not at fault. In the given case, The banker had not received any written request from the customer for transfer of funds abroad. The Forms required under the Income-tax law had not been submitted. The compliances required under the Foreign Exchange Management Act 'FEMA' had not been complied with. The bank did not ascertain the identity of the customer. Therefore, it is clear from fact of the case that the banker was negligent in his duties. The insurance policy excludes paying ability of the insurance claim, where the loss is caused to the negligence of the insured. The Forensic Auditor was thus able to help Insurance Company which repudiated the claim, as a consequence.