Source: https://www.wilmerhale.com/insights/client-alerts/fincen-assesses-1-million-civil-penalty-against-former-chief-compliance-officer-and-partners-with-sdny-to-initiate-injunctive-action
Timestamp: 2019-04-19 00:18:34+00:00

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As compliance professionals take a seat at their desks for another year of policing internal conduct at their firms, they face a new risk themselves: individual liability that could result in millions of dollars in fines and the effective end of their careers. Last month, the Financial Crimes Enforcement Network (FinCEN) and the US Attorney’s Office for the Southern District of New York combined to take action in United States Department of the Treasury v. Thomas E. Haider1 against a former Chief Compliance Officer for MoneyGram International Inc. for his alleged failure to implement and maintain a compliance program designed to protect against money laundering and to report suspicious activity. On the basis of its determination that this failure constituted a violation of the Bank Secrecy Act (BSA) and its implementing regulations, FinCEN assessed a $1 million civil penalty against Haider. A civil action, filed by the US Attorney’s Office the same day the assessment was announced, seeks to turn FinCEN’s assessment into an enforceable judgment and an injunction barring Haider from the financial industry. This litigation, certain to be contested, could signal a new approach by federal regulators and law enforcement seeking to hold individual compliance personnel responsible for programmatic failures.
First, there is the question of whether individuals may be held liable under the BSA for what appear to have been, at bottom, institutional failures. Although the BSA requires a financial institution to establish an AML program and to designate a compliance officer to assure day-to-day compliance with any such program,14 neither the BSA nor its implementing regulations specify what is required, if anything, of compliance officers such that a cause of action against individuals could be said to have been created. Rather, the regulations merely list what designated compliance officers’ responsibilities will include.15 Thus, while an institution may run afoul of the BSA for failing to establish the required AML program, it remains to be seen whether compliance officers may themselves be held liable for failing to carry out their listed responsibilities in an adequate manner.
Second, the Government’s interpretation of the willfulness requirement in 31 U.S.C. § 5321(a)(1) may be subject to challenge, both broadly and in this specific instance. In the complaint and assessment against Haider, the Government claims that willfulness for purposes of the BSA covers not only “knowing violations” but also those in which the defendant “acted recklessly or with willful blindness.”16 It remains an open question whether the type of inaction attributed to Haider in the assessment and complaint will satisfy such a standard.
Third, and perhaps most importantly, is the issue of the effect of this new approach, pursuant to which individuals may be held financially responsible for each day a financial institution’s AML program is not in compliance with federal regulations. Already, industry observers are questioning whether the action taken against Haider will have negative effects on the ability of financial institutions to hire and retain qualified professionals willing to take on these jobs.17 Compliance personnel serve a key role in advising businesses on regulations that seemingly are ever-increasing in their complexity. They are an important backstop and internal check on the business. Now, compliance personnel face the specter of a regulator or law enforcement agency holding them individually responsible after the fact for the advice they provide on where lines can be drawn.
1 No. 14 CV 9987 (S.D.N.Y. Dec. 18, 2014).
2 Compl. at ¶ 13.
9United States v. MoneyGram Int’, Inc., 12-cr-291 (M.D. Pa 2012).
10 In support of this allegation, the DPA (and the assessment and complaint) cite a refusal on the part of MoneyGram’s Senior Director of AML to conduct audits on certain outlets suspected of being involved in fraud and money laundering that MoneyGram refused to terminate because such outlets were “criminal operations” and sending audit teams into those outlets would place MoneyGram’s personnel in “physical danger.” Id.; Compl. at ¶ 63.
12 Compl. at ¶ 92.
14 31 U.S.C. § 5318(h).
15 31 C.F.R. § 1022.210(d)(2).
16 Id. at ¶ 27.
17See, e.g., “In bid to punish individual, FinCEN pursued MoneyGram business leaders, but caught compliance chief – source,” by Brett Wolf, Thomson Reuters (May 20, 2014), available at:http://blog.thomsonreuters.com/index.php/in-bid-to-punish-individual-fincen-pursued-moneygram-business-leaders-but-caught-compliance-chief-source/.

References: in fine
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