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Federal court: Former MoneyGram compliance chief personally liable for AML failures

The Treasury Department’s Financial Crimes Enforcement Network (FinCEN) has the power to punish compliance officers and other individuals for their company’s anti-money laundering control failures under the Bank Secrecy Act, a U.S. District Court in Minnesota ruled last week.

The case involved a $1 million fine FinCEN imposed in December 2014 against the former chief compliance officer of MoneyGram, Thomas Haider.

FinCEN said then that Haider failed to ensure that MoneyGram complied with the anti-money laundering provisions of the Bank Secrecy Act.

Haider didn’t file suspicious activity reports on agents he knew or suspected were engaged in fraud, money laundering, or other criminal activity, FinCEN said. And he failed to perform adequate due diligence or audits or terminate known high-risk agents.

His lawyers argued that the Bank Secrecy Act didn’t allow individuals to be held responsible for corporate AML failures. They also said FinCEN’s actions violated Haider’s due process rights.

But federal judge David Doty cited language in the Bank Secrecy Act allowing penalties against a “partner, director, officer, or employee.”

“The plain language of the statute provides that a civil penalty may be imposed on corporate officers and employees like Haider, who was responsible for designing and overseeing MoneyGram’s AML program,” Judge Doty said.

In a 2012 federal settlement, Dallas-based MoneyGram paid $100 million to compensate fraud victims.

Scammers told victims they’d won the lottery or been hired for a “secret shoppers” program. Others were duped to believe they’d been approved for a guaranteed loan or had won a cash prize.

The fraudsters convinced victims to use MoneyGram’s transfer system to send them up front taxes, customs duties, or processing fees. Many victims were elderly.

The government said Haider could have stopped the fraud. He ran MoneyGram’s compliance program and anti-fraud department from 2003 to 2008.

In late 2014, FinCEN filed a complaint with the U.S. Attorney for Manhattan to enforce the $1 million penalty and to bar Haider from working in the financial industry. The case was transferred to Minneapolis, where Haider moved to dismiss the DOJ’s enforcement action.

One of Haider’s lawyers, Ian Comisky, said in 2014 that FinCEN’s action was overreaching. “While the current government mantra is for heightened individual responsibility, this is the wrong case to try to establish this principle.”

But FinCEN director Jennifer Shasky Calvery called Haider’s AML failures “an affront to his peers and to his profession.”

“With his willful violations,” she said, “he created an environment where fraud and money laundering thrived and dirty money rampaged through the very system he was charged with protecting.”


Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.

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