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Suppose a long-term client approaches a loan officer and provides a fake or outdated financial document. Having developed a very personal relationship with the client and looked over his/her investments for years, the officer senses something is unusual this time. Should the loan officer ask the client for additional information, talk to a supervisor, make the lending agreements tougher, or simply flag the client? Although these seem to be all very reasonable choices, in reality, client-bank relationships are far more complex than we think. Many bank employees may also lack the necessary support to make the “right” decision. According to Professor Chourou, we still know very little about how financial institutions operate when facing their clients’ fraudulent intentions. Therefore, it is hard to tell if and how banks handle such misconducts internally.
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