A California man, Ken Liem, has taken legal action against three prominent Asian-based banks—Fubon Bank, Chong Hing Bank, and DBS Bank—for allegedly facilitating a $1 million cryptocurrency scam.
The lawsuit, filed in a California district court on December 31, 2024, claims that these banks failed to meet fundamental financial compliance requirements, including Know Your Customer (KYC) and Anti-Money Laundering (AML) checks, which might have prevented the fraud.
Allegations Of Compliance Failures And Financial Oversight
The lawsuit traces the scam’s origins back to June 2023, when Liem was approached on LinkedIn with what seemed to be a legitimate cryptocurrency investment opportunity. Over the following months, Liem transferred significant funds into accounts held at the three banks.
These funds were subsequently moved to third-party accounts, allegedly controlled by the scammers. Liem’s legal team asserts that basic compliance checks could have revealed irregularities in these accounts, potentially flagging them as suspicious before significant damage occurred.
Liem’s attorneys also argue that the banks involved neglected essential KYC and AML measures, which are standard industry practices designed to prevent financial fraud.
They claim that even a basic review of the accounts would have revealed inconsistencies, including a lack of verifiable evidence supporting the legitimacy of the account holders’ business activities. The lawsuit states that the banks likely overlooked clear warning signs and, in doing so, played an indirect role in facilitating the scam.
Additionally, the suit accuses the banks of violating the US Bank Secrecy Act (BSA), which mandates financial institutions to maintain records of transactions and report any suspicious activities to the Financial Crimes Enforcement Network (FinCEN).
Given that DBS Bank operates a branch in California and the transactions from Fubon and Chong Hing were routed through Liem’s Wells Fargo account, the lawsuit argues that these banks fall under US regulatory jurisdiction.
This connection forms the basis of the claim that the banks had a legal obligation to act on the suspicious nature of these transactions.
Legal Implications And The Growing Threat of Crypto Scams
The lawsuit also highlights the involvement of Hong Kong-based business entities—Richou Trade, FFQI Trade, Xibing, and Weidel—that allegedly funneled Liem’s funds to third-party accounts. These entities are accused of being intermediaries in the scam, serving as channels for laundering the stolen funds.
Notably, the case highlights the persistent vulnerabilities in the global financial system, particularly in the context of cross-border cryptocurrency fraud schemes.
It raises questions about the responsibilities of banking institutions in preventing such scams and ensuring compliance with international financial regulations. If the lawsuit progresses, it could set a precedent for holding banks accountable for failing to flag suspicious activities in crypto-related transactions.
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