By Rachel Louise Ensign
A U.S. regulator fined a former MoneyGram International Inc.
chief compliance officer Thursday, in a rare case of a compliance
staffer being held responsible for controls failures.
The Treasury Department's Financial Crimes Enforcement Network
handed down a civil penalty of $1 million on the former executive,
Thomas Haider, for allegedly not ensuring that his former employer
followed anti-money-laundering laws. The fine raises the stakes for
compliance officers, who have grown increasingly concerned about
being held liable for on-the-job decisions.
FinCEN, which is responsible for enforcing money-laundering laws
and collecting data on potential financial crimes, is also seeking
to bar him from the financial industry. The Manhattan U.S.
attorney's office on Thursday sued Mr. Haider in an effort to
collect the penalty and enforce the ban.
Mr. Haider believes the allegations are "unfounded," his
attorney Ian Comisky of Blank Rome LLP said in a news release.
Top compliance staffers at global companies have rarely faced
such penalties, and the penalty is a sign that FinCEN is following
through on its promises to increasingly hold individuals
responsible for lapses in corporate controls. Other regulators are
vowing to take the same approach.
"I think this makes good on our commitment that we've made from
the time I came to FinCEN that we will at least consider
individuals in every investigation we pursue," director Jennifer
Shasky Calvery said in an interview.
The agency has raised its profile under the leadership of Ms.
Shasky, a former prosecutor who took on her role in 2012. Since
then, FinCEN has said it would focus on individuals as well as
previously overlooked areas of enforcement such as casinos and
money-services businesses.
"While the current government mantra is for heightened
individual responsibility, this is the wrong case to try to
establish this principle," Mr. Comisky said.
Compliance staffers have become a hot commodity in recent years
as financial-services firms have tried to bolster controls in the
wake of huge fines and new regulatory scrutiny. Some have gone so
far as to say these employees may choose another line of work if
they fear being fined.
News of the agency's probe of Mr. Haider as well as the penalty
of another high-profile compliance staffer have stirred fears among
compliance workers. Some now say they worry that they could be
penalized for decisions they make in the course of their work.
"Many of my colleagues are absolutely terrified," said Bob
Werner, global head of financial crime compliance at HSBC Holdings
PLC and a former head of FinCEN, speaking at a conference in
September.
Mr. Haider's attorney, Mr. Comisky, also raised this concern on
Thursday. "This lawsuit is unprecedented and will undoubtedly have
a chilling impact on those who work, or seek to work, as compliance
officers at U.S. financial institutions," he said.
But Ms. Shasky said that most compliance officers have nothing
to fear. "We consider compliance officers to be our most valued
partners. We recognize that the vast, vast majority are out there
doing the right thing every day," she said. "That being said, there
are times, unfortunately, where people don't live up to their
responsibilities."
Mr. Haider was chief compliance officer at the money-transfer
firm from 2003 to 2008, the U.S. attorney's office said. The former
executive can now fight the penalty in court.
FinCEN alleges that Mr. Haider didn't file suspicious-activity
reports, which financial institutions are required to file under
anti-money-laundering laws, on agents "whom he knew or had reason
to suspect were engaged in fraud, money laundering, or other
criminal activity," the release said.
He also allegedly didn't take action against agents based on
complaints he received, which "led to thousands of innocent
individuals being duped out of millions of dollars," the release
said.
The probe of Mr. Haider is connected to the investigation of
MoneyGram that the company settled with the U.S. Department of
Justice in 2012 for $100 million, two people familiar with the
matter said. As a part of the settlement, the firm admitted
criminally aiding and abetting wire fraud and failing to maintain
an effective anti-money-laundering program in connection with a
fraud scheme between 2004 and 2009.
"Tom Haider has not been an employee of MoneyGram since May
2008. Since that time, MoneyGram's management, organizational
structure, and programs have changed significantly. It is
MoneyGram's policy not to comment on ongoing litigation," a
MoneyGram spokeswoman said in a statement.
The fine comes just months after another regulator penalized a
high-profile compliance officer, a move that stirred alarm in the
profession.
In February, the Financial Industry Regulatory Authority fined
Harold Crawford, Brown Brothers Harriman's global
anti-money-laundering compliance officer until the end of last
year. Finra alleged that Brown Brothers and Mr. Crawford failed to
establish an anti-money-laundering program that could reasonably
detect and report potentially suspicious activity, a task that is
generally the goal of such a program.
Brown Brothers Harriman agreed to pay a record $8 million fine.
Mr. Crawford was fined $25,000 and suspended for one month. Neither
the firm nor Mr. Crawford admitted or denied guilt as part of the
settlements. Mr. Crawford moved to a job at an affiliate of the
firm, according to the Finra action.
That penalty led even those at the very top of the compliance
profession to become concerned about individual liability.
After hearing about Finra's penalty of Mr. Crawford, Bill Fox,
head of global financial crimes compliance at Bank of America Corp.
asked bank leaders "'what are we doing about liability insurance?'"
according to a video recording of remarks at a March conference. "I
never ever thought I would have that conversation." Mr. Fox,
himself also a former head of FinCEN, also said he knew and
respected Mr. Crawford "a great deal."
Write to Rachel Louise Ensign at rachel.ensign@wsj.com
Access Investor Kit for HSBC Holdings Plc
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=GB0005405286
Access Investor Kit for HSBC Holdings Plc
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US4042804066
Access Investor Kit for MoneyGram International, Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US60935Y2081
Subscribe to WSJ: http://online.wsj.com?mod=djnwires