Former Chief Compliance Officer Personally Sued by Department of Treasury Former Chief Compliance Officer Personally Sued by Department of Treasury

Former Chief Compliance Officer Personally Sued by Department of Treasury

In what appears to be a very unusual and perhaps unprecedented Complaint, a former Chief Compliance Officer was personally sued on December 18, 2014, in an action brought by the US Attorney for the Southern District of New York on behalf of the Department of Treasury.  The 57 page Complaint against Thomas E. Haider, former Chief Compliance Officer of MoneyGram International, Inc. (MoneyGram"), was filed in the US District Court for the Southern District of New York. 
This lawsuit comes after the Financial Crimes Enforcement Network ("FinCEN"), a component of the United States Department of the Treasury, assessed a civil monetary penalty of $1 million against Haider.  The assessment charged Haider with willfully violating the Bank Secrecy Act and its implementing regulations.  The lawsuit seeks:
(1) to reduce the assessment to a $1 million judgment against Haider and
(2) an injunction against Haider preventing him from involvement in the affairs of any financial institution for a set term of years to be determined at trial.
Of course at this point, the lawsuit has just been initiated and the outcome is not certain.  However, the filing of the Complaint is of interest to compliance officers within and outside the financial industry. 
Among the questions being considered by compliance professionals are:
·         Whether this Complaint indicates a new trend to try to hold Chief Compliance Officers personally     liable? 
·         Does this case have any precedent outside the financial industry or beyond the Bank Secrecy Act?
·         Was the conduct alleged in the Complaint so egregious that this case has little precedential value beyond these particular facts?
·         To what extend is a CCO required to "ensure" compliance?  The Complaint uses the word "ensure" numerous times when it refers to expectations of Haider.  For example, the Complaint states:  "MoneyGram's Chief Compliance Officer was responsible for ensuring that the Company implemented and maintained an effective AML (anti-money laundering) program and complied with its SAR (suspicious activity reports)-filing obligations." 
·         How much decision making authority does a CCO have?  The Complaint alleges that Haider had the authority to terminate "outlets" that were identified as "high fraud outlets" but in many cases failed to do so.  However, the Complaint also mentions "that when the Fraud Department wanted to terminate an agent/outlet, it generally had to consult with the Sales Department before doing so."
In light of this Complaint, Chief Compliance Officers should continue to evaluate their compliance programs with the goal of continuous improvement.  At minimum, this case reminds us that having robust policies, training, monitoring and auditing programs in place are the foundation of a strong compliance program.  Likewise, having a program that appropriately investigates allegations of non-compliance and includes remedial action is an integral part of a strong compliance program.

Link to Complaint
The 57-page complaint
Link to Government's press release - 

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader must consult with legal counsel to determine how laws or decisions discussed herein apply to the reader's specific circumstances.

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