ABA Banking Journal
No Result
View All Result
  • Topics
    • Ag Banking
    • Commercial Lending
    • Community Banking
    • Compliance and Risk
    • Cybersecurity
    • Economy
    • Human Resources
    • Insurance
    • Legal
    • Mortgage
    • Mutual Funds
    • Payments
    • Policy
    • Retail and Marketing
    • Tax and Accounting
    • Technology
    • Wealth Management
  • Newsbytes
  • Podcasts
  • Magazine
    • Subscribe
    • Advertise
    • Magazine Archive
    • Newsletter Archive
    • Podcast Archive
    • Sponsored Content Archive
SUBSCRIBE
ABA Banking Journal
  • Topics
    • Ag Banking
    • Commercial Lending
    • Community Banking
    • Compliance and Risk
    • Cybersecurity
    • Economy
    • Human Resources
    • Insurance
    • Legal
    • Mortgage
    • Mutual Funds
    • Payments
    • Policy
    • Retail and Marketing
    • Tax and Accounting
    • Technology
    • Wealth Management
  • Newsbytes
  • Podcasts
  • Magazine
    • Subscribe
    • Advertise
    • Magazine Archive
    • Newsletter Archive
    • Podcast Archive
    • Sponsored Content Archive
No Result
View All Result
No Result
View All Result
ADVERTISEMENT
Home Compliance and Risk

Who Should Have Personal Liability for Compliance Failures?

August 17, 2015
Reading Time: 2 mins read

By Dawn Causey

Although it is impossible to find a chief compliance officer (CCO) at the top of any company organizational chart, recent cases have concluded that the buck stops with the CCO. And that has gotten every compliance officer’s attention.

Using an untested theory of liability, federal regulators and private regulatory organizations are seeking to hold CCOs personally liable for banks and companies failing to comply with anti-money laundering (AML) and other requirements.

The only case being actively litigated is the one with the biggest penalty. U.S. Dept. of Treasury v. Haider involves the former CCO for MoneyGram. FinCEN alleged and MoneyGram admitted to aiding and abetting wire fraud and willfully failing to implement an effective AML program. The scams included a number of schemes that induced consumers to send money to the fraudsters. Federal and state agencies alleged that the company should have known it was facilitating fraud. The case against Haider alleged his responsibility for programmatic violations and failure to report suspicious activity. A $1 million penalty was assessed against Haider personally and he was banned from further employment in the industry. Among the failures cited were failure to: implement a discipline policy; terminate known high-risk agents/outlets; file timely suspicious activity reports; conduct effective audits of agents or outlets; and conduct adequate due diligence for the company.

Haider moved to dismiss the allegations and oral arguments will be held in September. His motion argues that one of the two statutes cited against him in the Bank Secrecy Act never contemplated individual liability, and the government’s failure to track the money penalties to the statutes cited dooms the entire penalty assessment.

Another case is FINRA v. Harold A. Crawford, the former global AML/CCO of Brown Brothers Harriman. That case, involving penny stock fraud, resulted in Crawford being assessed a personal penalty of $25,000 while Brown Brothers paid $8 million. Crawford’s failing? He was held personally liable because he had written a memorandum to his superiors detailing the issues with the penny stocks, but failed to take any action. FINRA stated that putting the company on notice was not sufficient to eliminate his personal liability.

The SEC weighed in with its own order against the CCO of SFX Financial Advisory Management Enterprises, Inc., in June of this year. In that case the former president of SFX misappropriated $670,000 from three client accounts. The company agreed to a penalty of $150,000; the CCO paid a $25,000 personal penalty. Even though SFX conducted an inquiry and fired the president, both the company and the CCO were held liable for violating the Investment Advisors Act because SFX failed to adopt and implement written policies and procedures designed to prevent the president’s fraudulent acts and failed to reasonably supervise the president—and the CCO did not conduct the annual review of its compliance program in 2011, the year during which the fraud was discovered.

Holding CCOs liable for company failures will make compliance folks skittish at best and difficult to hire or keep. And who would blame them? Other cases have forced resignations, clawbacks and orders tying compensation to compliance success. While banking may be the business of risk management, personal liability for CCOs puts them in a serious predicament of assessing business risk appetites against their own. Compliance is challenging enough without personal liability. Is the CCO the correct target?

ADVERTISEMENT
Tags: Bank Secrecy ActProfessional liability
ShareTweetPin

Related Posts

Is deepfake technology shifting the gold standard of authentication?

Will fraud prevention ever be autonomous?

Technology
June 17, 2025

Anti-fraud systems are learning to anticipate fraud rather than merely react to it. Better anticipatory abilities inch systems closer to full automation.

New infographics provide advice for identifying money mules, check fraud

Banking agencies seek public comment on strategies to combat payments fraud

Compliance and Risk
June 16, 2025

The FDIC, Federal Reserve and OCC issued a request for comment on potential actions to help consumers, businesses and financial institutions mitigate risks related to payments fraud, particularly check fraud.

CFPB claims ‘complex’ pricing drives up cost of financial products

ABA, associations reiterate concerns about CFPB nonbank registry

Compliance and Risk
June 16, 2025

ABA joined two associations in reiterating their concerns about the CFPB’s nonbank registry, which the current bureau leadership has proposed to eliminate.

Republican AGs criticize hiring of OCC climate risk officer

Basel Committee issues voluntary climate disclosure framework

Compliance and Risk
June 16, 2025

Reflecting significant pushback from both ABA and U.S. banking agencies, the Basel Committee last week issued a framework for voluntary disclosure of climate-related financial risks for large international banks.

A Risk Manager’s Guide to the Reference Rate Transition

Credit-sensitive Libor replacements still seek traction

Commercial Lending
June 16, 2025

Looming volatility and recent developments may give AXI and Ameribor a boost

CFPB launches ‘tip line’ to report on bureau employees

ABA, associations urge CFPB to rescind changes to adjudication process

Legal
June 13, 2025

ABA joined three associations in voicing support for a CFPB proposal to rescind a set of changes to the bureau’s rules that, among other things, gave its director authority to resolve adjudication hearings overseen by the agency.

NEWSBYTES

Banking agencies seek public comment on strategies to combat payments fraud

June 16, 2025

ABA urges CFPB to preserve streamlined mortgage relief option

June 16, 2025

Illinois pushes back implementation date for state interchange fee law

June 16, 2025

SPONSORED CONTENT

AI Compliance and Regulation: What Financial Institutions Need to Know

Unlocking Deposit Growth: How Financial Institutions Can Activate Data for Precision Cross-Sell

June 1, 2025
Choosing the Right Account Opening Platform: 10 Key Considerations for Long-Term Success

Choosing the Right Account Opening Platform: 10 Key Considerations for Long-Term Success

April 25, 2025
Outsourcing: Getting to Go/No-Go

Outsourcing: Getting to Go/No-Go

April 5, 2025
Six Payments Trends Driving the Future of Transactions

Six Payments Trends Driving the Future of Transactions

March 15, 2025

PODCASTS

Podcast: Old National’s Jim Ryan on the things that really matter

June 12, 2025

Podcast: What bankers need to know about ‘First Amendment audits’

June 5, 2025

Podcast: Accelerating banking for quick-service restaurants

May 8, 2025
ADVERTISEMENT

American Bankers Association
1333 New Hampshire Ave NW
Washington, DC 20036
1-800-BANKERS (800-226-5377)
www.aba.com
About ABA
Privacy Policy
Contact ABA

ABA Banking Journal
About ABA Banking Journal
Media Kit
Advertising
Subscribe

© 2025 American Bankers Association. All rights reserved.

No Result
View All Result
  • Topics
    • Ag Banking
    • Commercial Lending
    • Community Banking
    • Compliance and Risk
    • Cybersecurity
    • Economy
    • Human Resources
    • Insurance
    • Legal
    • Mortgage
    • Mutual Funds
    • Payments
    • Policy
    • Retail and Marketing
    • Tax and Accounting
    • Technology
    • Wealth Management
  • Newsbytes
  • Podcasts
  • Magazine
    • Subscribe
    • Advertise
    • Magazine Archive
    • Newsletter Archive
    • Podcast Archive
    • Sponsored Content Archive

© 2025 American Bankers Association. All rights reserved.