[This case was adapted from CFA Institute, Ethics in Practice Casebook]

Wang is president and CEO of Royal Capital Investment Group (RCIG), an

investment adviser business that is owned by Royal Capital Bank. RCIG uses the

Bank’s 32 branch office network to operate. A client of the Bank that is a

long-time customer and Wang’s personal friend and friend of other Bank board

members opened an investment account with stated investment objectives for its

income. While the customer did make a few investment transactions over the

year, the bulk of transactions involved hundreds

of money transfers amounting to $95 million in deposits and $79 million in withdrawals.

The transactions included transfers to and from entities and persons

located in countries or banks identified by the government regulator as having

significant money laundering risk. Furthermore, Wang came to know that the customer

engaged in certain types of international activities that are easily tainted by

corruption and bribery. But because of the customer’s longstanding relationship

with the Bank, Wang presumed the transactions to be legitimate. Wang even

approved the daily Anti-Money Laundering reports that would have triggered suspicious

activities including accepting vague transaction descriptions such as “fees collected

for services provided”, “commissions for work done”, or “consultancy fees” without

further investigation. Wang’s actions are