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CCO Barred and Fined $250,000 for AML Compliance Breakdowns

The Chief Compliance Officer of a money transmitter agreed to pay a $250,000 penalty and a 3-year bar from serving in a compliance function in connection with anti-money laundering compliance failures.  As part of his settlement with FinCEN and the U.S. Attorney, the CCO also admitted to failing to stop potential money laundering despite being “presented with information that strongly indicated that the outlets were complicit in consumer fraud schemes” and implementing an inadequate AML program.  The settlement concludes the case which had initially imposed a $1 Million fine, which could have been as much as $4.75 Million based on the statutory penalty of $25,000 for each failure to file a Suspicious Activity Report.  The Acting U.S. Attorney explained the decision to prosecute a CCO: “Compliance officers perform an essential function, serving as the first line of defense in the fight against fraud and money laundering.”

OUR TAKE: Compliance officers that assume anti-money laundering duties are subject to prosecution and significant fines by both FinCEN and the DoJ (in addition to FINRA and other financial regulators).  Nobody condones the CCO’s conduct in this case, but one question many compli-pros have asked is why has the CCO been singled out for personal liability?  Why didn’t the feds pursue the operations folks that vet clients or the senior executives in charge?   And, why does the CCO pay a fine when he did not financially benefit from the misconduct?

https://www.fincen.gov/news/news-releases/fincen-and-manhattan-us-attorney-announce-settlement-former-moneygram-executive

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