There was much chatter regarding the origin of the $28,500 transfer into the accounts of Syed Farook and Tashfeen Malik, the San Bernardino terrorist that brutally killed 14 innocent people. It quickly came to light the loan had originated from Prosper, a leading marketplace lending platform. Prosper, via a spokesperson, quickly published a statement regarding the circumstances surrounding the unfortunate event;
“Prosper is prohibited by law from disclosing any non-public, personally identifiable information regarding any loan originated through our platform. All loans originated through the Prosper platform are subject to all identity verification and screening procedures required by law, including US anti-terrorism and anti-money laundering laws. As part of our standard procedures, we also confirm that all loan funds are disbursed into a verified US bank account in the borrower’s name. Like all Americans, Prosper is shocked and saddened by recent events in San Bernardino.”
Brian Korn, a well-respected attorney in the crowdfunding / marketplace lending sector, was quoted in a WSJ.com article but, as some editors may do, found his remarks trimmed just a bit. Korn, via an email distribution, clarified his statement;
“Reports show that the San Bernardino shooter took out an online marketplace loan a few weeks prior to the attacks. Despite the terrorists resorting to marketplace lending, I do not believe there is anything that could have prevented this tragedy. The platforms and partner banks screen for AML/OFAC and validate identity. They also screen for someone volunteering that they intend to commit a criminal act in the “Other” field. Despite the tech gloss that these originators bathe themselves in, marketplace loans are made by banks that are highly regulated. Short of drawing racist arbitrary lines, there is nothing that existing or new regulations could solve for here. One could argue that but for MPL the shooter wouldn’t have had the cash (assuming it was used for the attack). But that’s a ludicrous assertion, similar to blaming his job for paying him a salary, the car rental facility for renting him a car and the gas station for selling him gas.
My quote in this Wall Street Journal article was somewhat truncated in that my point was that consumer MPLs by and large do not police use of proceeds to ensure the loan is used for debt consolidation. This is no different from offline discretionary lending. Use of proceeds is not a real underwriting criterion—we are an industry that looks at credit and payment history as a predictor of repayment, not what the borrower plans to do with the funds. Actions are more important than words.”
The reality of the situation is the San Bernardino terrorists could have accessed any number of services to garner funds. Furthermore, the evil pair were previously on no one’s radar. He held a respectable job.
There is not much a lender can do in this situation. Be it on or offline. We all need to be a bit more vigilant but as Korn points out, there is little new or existing rules could do to guard against such occurrence.