FinCEN Gets Its Man – Former MoneyGram Compliance Officer Agrees to Settlement for BSA Violations
On May 4, 2017, the Financial Crimes Enforcement Network (FinCEN) and the U.S. Attorney's Office for the Southern District of New York announced a settlement with Thomas E. Haider, the former chief compliance officer of MoneyGram International, Inc. (MoneyGram). Haider was chief compliance officer for MoneyGram from 2003 to 2008. In that capacity he oversaw the company's fraud department and headed its AML compliance department.
As part of the settlement, Haider agreed to a three-year injunction from performing a compliance function for any money transmitter and to pay a $250,000 penalty. According to FinCEN, Haider also admitted, acknowledged and accepted responsibility for not: 1) not terminating MoneyGram outlets after receiving information that strongly indicated these outlets were complicit in consumer fraud schemes; 2) not implementing a policy for terminating outlets posing a high risk of fraud; and 3) structuring MoneyGram’s anti-money laundering (AML) program in way that that information compiled by the company’s fraud department on outlets, including the number of reports of consumer fraud that particular outlets had accumulated over specific time periods, was not generally provided to the MoneyGram analysts responsible for filing suspicious activity reports (SARs) on such activity.
FinCEN initiated its action against Haider back in December 2014, with its announcement of a $1 million civil money penalty assessment and complaint filed in U.S. District Court to enforce the penalty and to prohibit Haider from employment in the financial industry. Haider fought back by filing a motion to dismiss the suit. In January 2016, a federal district court in Minnesota ruled that the Bank Secrecy Act (BSA) permits FinCEN to bring suit against individuals for willfully violating the BSA's AML program requirement. Although the court denied his motion to dismiss, Haider continued to fight by filing a counterclaim in February 2016. The government responded to Haider's counterclaim and the parties went back and forth through the end of February 2017, until all actions were concluded with the announcement of the settlement, which was approved by U.S. District Judge David S. Doty of the U.S. District Court for the District of Minnesota.
The Haider case has been an interesting one to watch as the government pushed to impose personal liability on compliance professionals over corporate-wide shortfalls. A FinCEN spokesperson stated this was one of the largest fines ever imposed by FinCEN on an individual. Acting FinCEN Director Jamal El-Hindi stated, "“FinCEN relies on compliance professionals from every corner of the financial industry. FinCEN and our law enforcement partners need their judgment and their skills to effectively fight money laundering, fraud, and terrorist financing. Compliance professionals occupy unique positions of trust in our financial system. When that trust is broken, it is important that we take action so that the reputations of thousands of talented compliance officers are not diminished by any one individual’s outlying egregious actions. We have repeatedly said that when we take an action against an individual, the record will clearly reflect the basis for that action. Here, despite being presented with various ways to address clearly illicit use of the financial institution, the individual failed to take required actions designed to guard the very system he was charged with protecting, undermining the purposes of the BSA. Holding him personally accountable strengthens the compliance profession by demonstrating that behavior like this is not tolerated within the ranks of compliance professionals.”
