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The private banker or "relationship manager" has become a guide through the complex world of financial services. The entry level for most of these private banks is $1 million, though in the fragmented industry you will find boutiques like Donaldson, Lufkin & Jenrette and J.P. Morgan that require $5 million, and aggressive players like Merrill Lynch that accept as little as $500,000.
The market these new private banks have found is huge. Some of it is the old-fashioned sort of money from Brazil or Mexico, seeking a safe haven from instability and high taxation. But most of it is "onshore": millions of newly wealthy professionals and business proprietors in Europe, Asia, Latin American, the Middle East and Africa who don't need deep secrecy and want private-banking services provided in their own countries.
There is a new sophistication to private-banking clients that has taken some old-line European banks by surprise. "People have this image of private banking as a crusty old frock-coated Lord and Lady Jemima Puddleduck having tea with the bank manager," says Simon de Ferrer of the Royal Bank of Canada. "But the new wealth is more like Richard Branson"--the flamboyant British founder of Virgin Atlantic Airways and Virgin Records.
By now most large banks and brokerages in the western hemisphere have moved into some form of private banking, with Citibank using its peerless retail network to develop business among local elites around the world. Most of the private-banking departments offer trusts and accounts in Switzerland, the Caymans and other havens with tight bank-secrecy laws. (An ad for Citibank's Monaco private bank touts its "trust companies and private investment companies in the U.S., Bahamas, Cayman Islands, Jersey or Switzerland" that "can give the client confidence that their assets are held...in a way that is both tax-efficient and confidential.")
It is perhaps no surprise that in such an intensely competitive business, some of the newer private banks are running into trouble. Citibank was only one of several private banks that, according to investigators, could have more strictly observed a central tenet that private bankers call KYC. It stands for "Know Your Customer."
The problem for Amy Elliott at Citibank was not so much what she did but whom she did it for--at least in the view of the Mexican authorities who have brought criminal charges against Raul Salinas. In addition to getting Salinas Broadway theater tickets and managing his portfolio, she employed sophisticated asset-concealment techniques on his behalf. These techniques are used quite legally by wealthy individuals--say, a surgeon who wants to secure her life savings from potential malpractice suits or an estranged husband. Elliott was helping Salinas conceal his large transfers out of the country ostensibly because, as she explained in a 1996 deposition in New York, "if a member of the family of the President wanted to have his money outside, it would be politically sensitive." But various combinations of these techniques, employed through various banks, are also favored by tax cheats, corrupt politicians and drug dealers.