Federal and State Regulators Target Compliance Officers

On Dec. 18, 2014, the Financial Crimes Enforcement Network (“FinCEN”) issued a first-of-its-kind $1-million assessment against the former Chief Compliance Officer (“CCO”) and Senior Vice President of Government Affairs at MoneyGram International Inc. (“MoneyGram”). FinCEN determined that the CCO “willfully violated” the requirements to: (1) “implement and maintain an effective anti-money laundering program”; and (2) “report suspicious activity.” On the same day, the U.S. Attorney’s Office for the Southern District of New York filed a civil complaint in federal district court seeking to enforce the assessment and bar the former CCO from employment in the financial industry. These actions come two years after MoneyGram entered into a Deferred Prosecution Agreement with federal prosecutors on charges of aiding and abetting wire fraud and willfully failing to implement an effective anti-money laundering (“AML”) program.

Separately, on Dec. 22, 2014, Bank Leumi USA and Bank Leumi Le-Israel, B.M. (collectively, “Bank Leumi” or the “Bank”) entered into a consent order with the New York State Department of Financial Services (“DFS”), under which the Bank admitted engaging in an illegal cross-border scheme to assist U.S. clients in evading federal and state taxes and agreed to pay DFS $130 million and hire an independent monitor. Bank Leumi further agreed to take steps to terminate and/or ban specific employees, including its former CCO, from engaging in compliance functions.

These enforcement actions, discussed in this Alert, are part of a growing trend by regulators seeking to hold individuals accountable for company misconduct, including failure to comply with AML and Bank Secrecy Act requirements, and demonstrate the vulnerability of compliance officers to such actions in this enforcement climate.