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DEEP BACKGROUND

THE BLOG ABOUT BACKGROUND CHECKING

Compliance executives accountable for not terminating accused third parties

TOPICS:  Due diligence

Federal prosecutors have held a former compliance chief for MoneyGram International Inc. personally responsible for failing to adequately enforce anti-money laundering standards among the company’s money-transfer agents and outlets.

The government’s recent court settlement with Thomas E. Haider prompted some corporate compliance practitioners to complain that authorities are unfairly scapegoating their profession for corporate impropriety while downplaying the role of higher-ups. Haider agreed to pay a $250,000 penalty and to be banned from the compliance profession for three years, settling a 2014 civil action filed against him by FinCEN.

“Indicated the outlets were complicit”

In the settlement, Haider admitted “failing to terminate specific MoneyGram outlets after being presented with information that strongly indicated the outlets were complicit in consumer fraud schemes,” DOJ said in a statement.

The DOJ statement said that in 2007 MoneyGram’s fraud department recommended Haider terminate about 49 of the firm’s Canadian outlets that appeared to be engaged in fraudulent money movement. But the DOJ statement added that Haider took no action against almost all 49 suspicious outlets, in part due to “pushback from the Sales Department” of MoneyGram.

“Constituted fraud proceeds”

In the case of one of the Canadian outlets, company anti-fraud officials told Haider that Toronto police had concluded it was “dirty,” a 2014 FinCEN document said. That outlet’s owner later pled guilty to a number of crimes, and “admitted that almost all of the money his outlets received constituted fraud proceeds,” the DOJ statement said. Following Haider’s settlement, MoneyGram released a statement saying that since his 2008 departure from the company, its “management, organizational structure, and compliance programs have changed significantly,” the Financial Times said.

“Strange and unfair”

The FT also reported that many compliance professionals “fear they are being sacrificed to the government’s desire to punish individuals for financial industry misdeeds.” The newspaper quoted Todd Cipperman, an industry consultant in Wayne, PA, as saying that “compliance officers find this case very troubling,..To hold him accountable and not hold other senior executives accountable seems strange and unfair.”

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