United States: FinCEN Assesses $1 Million Civil Penalty Against Former Chief Compliance Officer And Partners With SDNY To Initiate Injunctive Action

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.  
Summary of FinCEN's Assessment and the Litigation 
As Chief Compliance Officer from 2003 until he left MoneyGram in 2008, Haider supervised MoneyGram's Fraud and Anti-Money Laundering (AML) Compliance Departments.2 MoneyGram enables customers to transfer money from one location to another through a global network of agents and outlets.3 MoneyGram's Senior Director of AML Compliance, Director of AML Compliance and Fraud, and Director of Fraud (communications from all of whom are quoted in the assessment and complaint) "worked under, and had direct contact with" Haider.4 Haider allegedly had the authority to terminate or otherwise discipline MoneyGram agents and outlets due to "compliance concerns" and also allegedly had the authority to decline to approve new agents or outlets.5 Although he did not report directly to MoneyGram's Board of Directors, he made presentations quarterly to the Audit Committee on developments in MoneyGram's AML program and those presentations "were not screened by MoneyGram's other senior managers."6
In 2009, after Haider had left MoneyGram, the Federal Trade Commission filed a complaint against MoneyGram alleging that, between 2004 and 2008, MoneyGram agents in the United States and Canada "aided fraudulent telemarketers and other perpetrators of telephone and internet scams who misled US consumers into wiring tens of millions of dollars" to participants in fraudulent schemes.7 In 2012, MoneyGram entered into a deferred prosecution agreement (DPA) with the US Department of Justice's Asset Forfeiture and Money Laundering Section and the US Attorney's Office for the Middle District of Pennsylvania on charges of aiding and abetting wire fraud and willfully failing to implement an effective AML program.8
As part of the DPA, MoneyGram admitted that it had "willfully failed to maintain an effective anti-money laundering program that was reasonably designed to prevent it from being used to facilitate money laundering."9 The specific programmatic failings to which MoneyGram admitted included:

  • a failure to implement policies or procedures governing the termination of MoneyGram agents involved in fraud and money laundering;  
  • a failure to implement policies or procedures to file required suspicious activity reports (SARs) when victims reported fraud to MoneyGram on transactions over $2,000;  
  • a failure to file SARs on agents known to MoneyGram to be involved in fraud (MoneyGram's SARs instead listed the victim of the fraud as the likely wrongdoer);  
  • a failure to conduct effective AML audits of MoneyGram's agents and outlets10;  
  • a failure to implement policies or procedures to review MoneyGram transfer checks of agents known or suspected to be involved in check pooling, and  
  • a failure to conduct adequate due diligence on prospective MoneyGram agents or on agents seeking additional outlets.11
FinCEN's assessment and the action filed by the US Attorney's Office essentially seek to hold Haider personally responsible for many of the same programmatic failures to which MoneyGram admitted as part of its DPA. Although there are several instances where the assessment and complaint allege Haider had knowledge of specific compliance failings, for the most part they are based on Haider's authority to implement appropriate policies and procedures and his alleged failure to do so. The assessment and complaint also use Haider's acknowledgement of responsibility against him: Haider is quoted as saying, "I told you the buck stops with me," when asked who was responsible for the failure to terminate a particular outlet suspected of wrongdoing.12
The Government claims that Haider's alleged failings entitle it to "far more" than the $1 million penalty FinCEN assessed. On the basis of Haider's "willful failure" to ensure that MoneyGram implemented and maintained an effective compliance program for a period encompassing approximately 190 days, the Government contends that under the BSA he is subject to a penalty of $25,000 per day of non-compliance.13 
Key Takeaways
There are several important legal and policy questions raised by this new approach:
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.

3 Id. at ¶ 30.
4 Id. at ¶ 46.

5 Id. at ¶ 49.

6 Id. at ¶ 52.

7 Id. at ¶ 61.

8 Id. at ¶ 62-63.
9 United 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.

11 Id.
12 Compl. at ¶ 92.
13 Id. at ¶ 132-34.
14 31 U.S.C. § 5318(h).
15 31 C.F.R. § 1022.210(d)(2).
16 Id. at ¶ 27.

17 See, 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/

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions