The U.S. government's decision to sue a former compliance officer for $1 million over his alleged failure to ensure that anti-money laundering (AML) procedures at the company he worked for were followed - a decision which has disturbed some observers - raises questions about the personal liability of compliance officers in The Bahamas, especially as the jurisdiction embraces Internet gaming.
On December 18, the U.S. attorney for the Southern District of New York and the Financial Crimes Enforcement Network (FinCEN), announced that the U.S. filed a civil enforcement action against Thomas Haider, former chief compliance officer of MoneyGram International Inc. for violating the Bank Secrecy Act. MoneyGram operates a money transfer service that enables customers to transfer money from one MoneyGram location to another.
Responding to the announcement, Haider's lawyers, Blank Rome LLP, noted that the FinCEN complaint seeks the enforcement of a civil monetary penalty assessed by FinCEN and further seeks injunctive relief preventing Haider from working in the financial services industry.
"Mr. Haider served as MoneyGram's chief compliance officer until May 2008, when he left the company. In 2012, MoneyGram entered into a deferred prosecution agreement with the justice department, agreed to pay a $100 million fine and acknowledged that the company had systemic anti-money laundering compliance failures that allowed certain MoneyGram agents to perpetrate fraud on consumers," Blank Rome pointed out in a statement.
"FinCEN's action marks the first time, to our knowledge, that the government has filed suit to hold an individual compliance officer personally responsible for the alleged anti-money laundering compliance failures of his employer," the lawyers said. According to Mr. Haider's lead counsel, Blank Rome LLP Partner Ian M. Comisky, "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 and serve on the front lines in the government's fight against money laundering and terrorist financing."
Guardian Business understands that - chilling though Comisky may deem it - the individual liability of compliance officers is a growing movement in the industry.
For example, the Association of Certified Financial Crime Specialists (ACFCS) in March 2014 cited "a quickening trend...that puts compliance officers at financial institutions and other businesses at a greater personal risk than ever before".
"This new occupational hazard has resulted in adverse actions against individual compliance officers by government regulatory and enforcement agencies, including monetary penalties, dismissals or downgrading of positions and criminal prosecutions," the ACFCS staff report said.
"Individual compliance officers are increasingly exposed to personal liability for institutional lapses and failings. This brings a new dynamic to one of the fastest-growing occupations in the United States and other countries."
The perceived and actual value of compliance officers at medium-sized and large institutions has risen substantially, as evidenced recently in The Bahamas, where financial services professionals who lose jobs in the financial services industry are reportedly increasingly seeking work as compliance officers in the gaming industry.
In the U.S., The Bahamas and elsewhere, this new importance has been driven by far-reaching government efforts against tax evasion, money laundering, sanctions violations and public corruption. While the stature of compliance officers has increased, so has their exposure to personal liability for programmatic failings. Increasingly, compliance is a "high-risk, high-reward" profession.
"It is a dangerous profession," one local professional told Guardian Business.
That professional's assessment jibes with the May 2014 report by Jaclyn Jaeger. Writing for Compliance Week, Jaeger reported that chief compliance officers are increasingly finding themselves in the crosshairs of regulatory enforcement agencies.
She reported that the Securities and Exchange Commission and the Financial Industry Regulatory Authority have led the pursuit of individuals for alleged compliance lapses and executives in the financial services industry are especially vulnerable.
It remains to be seen whether this case, and the trend it signifies, will have implications in The Bahamas in a new gaming environment.

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