AxiTrader customer steals £194,000 over 8 days from British Dr’s NatWest Bank account to make deposits. Why was this allowed?

Dr Kristin Pagano got quite a shock when she checked her NatWest business bank account for last month’s transactions, only to find out that it had been emptied of £194,000 by fraudsters who had been using the account to make deposits to Australian online trading company AxiCorp, the firm behind the very well recognized brand, AxiTrader.

Dr. Pagano, from Chichester, a town near the South coast of England in the county of West Sussex, first noticed that something was amiss when she went to use her debit card in late November to buy a gift from an online company for a friend, and the card was declined.

At that time, Dr. Pagano considered that this may have been a system error, so she tried again one day later, at which time it was also rejected.

A call to NatWest, where Dr. Pagano held her business account, revealed that the account had been emptied by a number of withdrawals which amounted to an astonishing £194,000 and deposited in several transactions to AxiCorp.

Over the course of 8 days, a total of 32 unauthorized transactions were made by the fraudsters, with the first 9 being made on one day.

Absolutely no security alerts were brought up, which is very unusual because most banking systems trigger an alert if large transactions, or in this case a series of transactions with large values, is made to a company that is not normally associated with the account holder.

8 days went by, and the fraudsters managed to make 32 successful deposits to AxiCorp amounting to £194,000, without any action by NatWest Bank, or AxiCorp’s compliance department.

Retail FX trading companies are often very cautious when it comes to receiving funds via bank transfer, and their regulatory stipulations, regardless of jurisdiction, require all documents to be checked by compliance staff, and the origin of funds to be verified. If a series of large wire transfers should arrive from a bank account with a different name to that of the trading account holder, it is common practice for this not to pass the compliance procedure and funds to be returned to their source.

In this case, none of this occurred.

In criticism of how NatWest had allowed this to occur, Ms. Pagano said

“Surely, a bank of its status and standing should be doing more to protect customers from banking fraud. Surely, alarm bells should be ringing in its fraud detection department when unusual payments start being taken from someone’s account. In my case, 32 of them, some for the same amount on the same day.”

Dr. Pagano also has an account with Barclays, and has stated that every time it wants to query a transaction, Barclays sends her an SMS message to her telephone, which is a definite contrast to NatWest’s laisse faire approach to this situation.

NatWest’s statement on its commercial website reads

“Our detection system looks out for unusual patterns on your account, and if we notice anything of concern, we may contact you using our automated system or an operator to help protect you against fraud.”

This is contrary to the experience which has left Dr Pagano high and dry.

It is not uncommon for fraudsters, especially those with addictions, to attempt to deposit funds which do not belong to them into accounts at online trading companies, and unfortunately through research among many brokerages, most compliance officers see this kind of activity relatively regularly, hence their vigilant stance, however, in this case, the transactions slipped through the net.

To add insult to injury, NatWest responded to Dr. Pagano’s complaint by insisting that it had made no error in authorizing the transactions and allowing them to debit from her account, citing the fact that the transactions had ben made using the full amount of Dr Pagano’s debit card details.

It took a serious argument to bring the bank around to realizing that this was a fraud, and eventually the bank refunded the full amount and provided Dr. Pagano with a gesture of goodwill.

Caveat emptor, as they say….

Transaction list courtesy of the Daily Mail