Ex-MoneyGram compliance chief put on leave as U.S. fine looms

ST. LOUIS Fri May 2, 2014 12:38pm EDT

ST. LOUIS May 2 (Reuters) - A former compliance chief at MoneyGram International has been suspended from his current lobbying job for a credit-union trade group as he prepares to defend against a potential $5 million fine over his role in the money-transfer giant's anti-money laundering failures.

The suspension of Thomas Haider was confirmed on Thursday by his employer, the Cornerstone Credit Union League. It is the latest development in a case that raised the personal liability stakes for senior executives on the commercial front lines of an international crackdown on illicit financial transactions.

Although compliance officers in the past couple years have come to realize that they could face penalties, the fines levied on them have typically been in the tens of thousands of dollars. A fine in the millions of dollars would be unprecedented

Haider left MoneyGram, the world's second largest money-transfer company, in 2008 and for the past three years has been a lobbyist for Cornerstone.

Some months ago Haider received a letter from the U.S. Treasury Department's Financial Crimes Enforcement Network (FinCEN) advising that he might soon be penalized up to $5 million in relation to his role at Moneygram. The letter offered him a hearing to contest the action.

Cornerstone suspended Haider eight days after the potential fine was reported by Thomson Reuters' Compliance Complete.

"Mr. Haider, on Friday, April 25, was asked to take an indefinite leave of absence from his position with the Cornerstone Credit Union League in order to focus his attention on his personal situation related to FinCEN," Cornerstone spokesman Jon Gorman said in an emailed statement.

Neither Haider nor his lawyer, Ian Comisky, a partner with Blank Rome in Philadelphia, responded to requests for comment.

The specific allegations that FinCEN plans to levy against Haider are not known. The agency earlier declined to comment.

RISK CALCULUS CHANGES

The focus on Haider comes as the United States and other countries crack down on money-laundering in a larger effort to fight organized crime and enforce international economic sanctions.

U.S. lawmakers have been pressuring regulators and enforcement authorities to hold accountable individuals at financial services firms with systemic anti-laundering failures.

In the wake of HSBC's $1.9 billion settlement in December 2012 over serious anti-laundering and sanctions compliance failures, personal fines for compliance officer in the tens of thousands of dollars have become increasingly common.

However, the personal risk calculus for compliance officers, especially those in top leadership roles, changed dramatically with the disclosure that Haider faces a multi-million dollar penalty.

"It means that the only viable world for well-intentioned compliance professionals will be consulting, where you  hold none of the risk personally," a top compliance officer at one of the largest banks operating in the United States said.

The executive said that these are "scary" times, and that if FinCEN issues a massive penalty to Haider, it "better be backed by a fact set chock full of willful, borderline-illegal acts."

The executive and other senior compliance executives spoke on condition of anonymity, citing concern over retribution. All said they will wait and see how the case is resolved before making career moves.

FAILURES AT MONEYGRAM

MoneyGram agreed in November 2012 to forfeit $100 million as part of a deferred prosecution agreement with the Justice Department. MoneyGram admitted it aided in wire fraud and failed to maintain an effective anti-money laundering program during Haider's tenure as compliance chief, according to court documents.

MoneyGram also admitted failures to maintain an effective anti-money laundering program, in part because of its failures to report the agents involved in the fraud.

At the time of the MoneyGram settlement, FinCEN, which has authority to issue civil penalties, declined to penalize MoneyGram or its employees.

FinCEN's director, Jennifer Shasky Calvery, has taken a more aggressive enforcement stance since she became the head of the bureau in September 2012.

(Reporting by Brett Wolf of the Compliance Complete service of Thomson Reuters Accelus accelus.thomsonreuters.com; Editing by Randall Mikkelsen and Leslie Adler)

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