The Rs 400-crore scam at Citibank India is causing jitters in the wealth management space. Bank executives said that a two-pronged probe into high net-worth individual (HNI) accounts has been initiated. One, an audit of HNIs’ accounts has begun. Two, the background of schemes where clients have invested are being probed.Yesterday, the Gurgaon police launched an investigation into Citibank employee Shivaraj Puri, a relationship manager, for duping HNIs by selling them fraudulent schemes and diverting the money into accounts belonging to his wife and other relatives. HNIs are those with investible assets worth more than $1 million (roughly Rs 4.5 crore).“There is a health check-up going on in our firm. We have initiated an audit of all the dealings that our relationship managers have with their clients,” admitted the compliance head of a wealth management firm, under the condition of anonymity.
The probe also includes due diligence of schemes where investments have been made. “Investments in schemes, especially by Citi, are being looked into to verify if they have been authenticated by the bank,” said the compliance head.The role of relationship managers in wealth management is under special scrutiny. This is because many of them have the authority to issue third-party cheques on behalf of their clients. According to wealth management sources, HNIs give relationship managers power of attorney to operate their accounts. The Gurgaon scam could have been because of this.The modus operandi was quite simple. Puri asked clients to invest in schemes that were offering more than 20 per cent annual returns.He showed forged documents to prove these schemes were approved by Citibank’s investment product committee and regulator. After obtaining the client’s approval, he could have done two things. Either, he had got a blank cheque from the client and filled up the receiver’s name. Or, he had issued third-party cheques from the account of his clients’ Citibank account in his wife’s and relatives’ names.
The probe also includes due diligence of schemes where investments have been made. “Investments in schemes, especially by Citi, are being looked into to verify if they have been authenticated by the bank,” said the compliance head.The role of relationship managers in wealth management is under special scrutiny. This is because many of them have the authority to issue third-party cheques on behalf of their clients. According to wealth management sources, HNIs give relationship managers power of attorney to operate their accounts. The Gurgaon scam could have been because of this.The modus operandi was quite simple. Puri asked clients to invest in schemes that were offering more than 20 per cent annual returns.He showed forged documents to prove these schemes were approved by Citibank’s investment product committee and regulator. After obtaining the client’s approval, he could have done two things. Either, he had got a blank cheque from the client and filled up the receiver’s name. Or, he had issued third-party cheques from the account of his clients’ Citibank account in his wife’s and relatives’ names.
