CCOs On The Hook: FinCEN Seeking Fine Against Moneygram CCO

by Michael Volkov
Contact

moneygram5Chief Compliance Officers should take notice – the Treasury Department’s Financial Crimes Enforcement Network is proposing to fine Moneygram’s Chief Compliance Officer for Moneygram’s failure to police transactions for illicit activity.  The CCO faces a potential fine of up to $5 million.

A potential fine against a CCO who played a role in Moneygram’s anti-money laundering failures would be unprecedented but may be justified in this specific situation.

The CCO left Moneygram in 2008 after 16 years with the company.  In 2008, the CCO received $1.8 million in total compensation, most of which came from a severance package.

In November 2012, Moneygram forfeited $100 million and entered into a Deferred Prosecution Agreement.  Between 2003 and 2009, Moneygram processed thousands of transactions for its own agents who regularly tricked victims into wiring money by posing as relatives or promising cash prizes.

In response to thousands of complaints by customers who were victimized by Moneygram’s agents, Moneygram failed to stop the fraud, terminate the agents or remedy the situation.  Moneygram also violated the Bank Secrecy Act by failing to report the fraud activity.

FinCEN is led by Jennifer Shasky, the former Chief of the Justice Department’s Asset Forfeiture and Money Laundering Section.  She is very familiar with the facts of the Moneygram case and is committed to increasing FinCEN’s enforcement profile.

Congress has been pressuring the Treasury Department to step up its enforcement activities against individual board members, senior executives and other individuals tied to illicit financial activities.moneygram2

The proposed enforcement action will send an important message to the compliance community in the financial industry.  A CCO has to act when it is aware of misconduct.  The CCO cannot sit idly by and let violations occur, even when trying to implement important compliance reforms.

We do not know the precise facts of the CCO’s role in the Moneygram case, but the facts known to the public paint a pretty ugly picture.

For years, Moneygram’s fraud division accumulated thousands of consumer complaints and repeatedly notified senior management of the problem and recommended terminating agents engaged in fraud.  Despite the abundance of data and evidence indicating ongoing fraud, senior management repeatedly rejected or ignored the fraud division’s information and warnings.

It was only after the issuance of an FTC Civil Investigative Demand that senior management started to respond to the fraud division information.  The picture painted of senior management, which included the CCO, is particularly damning.

moneygram4As part of the DPA, Moneygram replaced the entire senior management team with new senior managers.  The CCO left the company in 2008, shortly before the matter came under government scrutiny.

If the CCO played a role in fostering or ignoring this blatant fraudulent scheme, the government is certainly justified in pursuing the CCO, and hopefully other top management with a direct link to this behavior.  The compliance profession should take heed – just like any profession, not everyone is an ethical and law-abiding person.  Even CCOs can engage in misconduct.  Let’s hope that there are not many others.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Michael Volkov, The Volkov Law Group | Attorney Advertising

Written by:

Michael Volkov
Contact
more
less

The Volkov Law Group on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.
Feedback? Tell us what you think of the new jdsupra.com!