Who Should Have Personal Liability for Compliance Failures?

By Causey, Dawn | ABA Banking Journal, September-October 2015 | Go to article overview

Who Should Have Personal Liability for Compliance Failures?


Causey, Dawn, ABA Banking Journal


ALTHOUGH IT IS IMPOSSIBLE to find a chief compliance officer at the top of any company organizational chart, recent cases have concluded that the buck stops with the CCO. And that has attracted every compliance officer's attention.

Using an untested theory of liability, federal regulators and private regulatory organizations are seeking to hold CCOs personally liable for banks and companies failing to comply with anti-money laundering and other requirements.

The only case being actively litigated is the one with the biggest penalty. U.S. Dept, of Treasury v. Haider involves the former CCO for MoneyGram. FinCEN alleged and MoneyGram admitted to aiding and abetting wire fraud and willfully failing to implement an effective AML program. The scams included a number of schemes that induced consumers to send money to the fraudsters.

Federal and state agencies alleged that the company should have known it was facilitating fraud. The case against Thomas Haider alleged his responsibility for programmatic violations and failure to report suspicious activity. A $1 million penalty was assessed against Haider personally and he was banned from further employment in the industry. Among the issues cited was failure to: implement a discipline policy; terminate known high-risk agents/outlets; file timely suspicious activity reports; conduct effective audits of agents or outlets; and conduct adequate due diligence for the company.

Haider moved to dismiss the allegations, and oral arguments will be held in September. His motion argues that one of the two statutes cited against him in the Bank Secrecy Act never contemplated individual liability, and the government's failure to track the money penalties to the statutes cited dooms the entire penalty assessment.

Another case is FINRA v. Harold A. Crawford, the former global AML/CCO of Brown Brothers Harriman. That case, involving penny stock fraud, resulted in Crawford being assessed a personal penalty of $25,000 while Brown Brothers paid $8 million. …

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