The former chief compliance officer for MoneyGram International has been fined $1 million for failing to ensure that his company abided by the anti-money laundering provisions of the Bank Secrecy Act.
The announcement was made on Thursday by the Treasury Department’s Financial Crimes Enforcement Network. Concurrently, the U.S. Attorney’s Office for the Southern District of New York filed a complaint in U.S. District Court that seeks to enforce the penalty and bar Thomas Haider from future employment in the financial industry.
From 2003 to 2008, Haider was the CCO for MoneyGram, where he oversaw its Fraud Department and AML Compliance Department. Acting on complaints to the Fraud Division, he could have suspended or terminated any agents that were participating in illicit activity, FinCEN said in a statement. Instead, “his inaction led to thousands of innocent individuals being duped out of millions of dollars through fraud schemes that funneled, and sometimes laundered, their illicit profits through MoneyGram’s money transmission network.”
Many of those schemes persuaded victims to send money through the participating MoneyGram agents and outlets with false promises that they had won a lottery, been hired for a “secret shoppers” program, were approved for a guaranteed loan, or were selected to receive an expensive item or cash prize. For example, in situations where the victims were promised lottery winnings or cash prizes, they were told that they had to pay taxes, customs’ duties, or processing fees up front and were directed to send the advance payments to fictitious payees using MoneyGram’s money transfer system.
Haider also failed in his responsibility to ensure the filing of suspicious activity reports on agents whom he knew or had reason to suspect were engaged in fraud, money laundering, or other criminal activity, FinCEN said. By failing to file SARs, “he denied critical information to law enforcement which could have been used to combat the fraud and dismantle the criminal networks.”
MoneyGram allegedly profited from the scheme by collecting fees and other revenues on the fraudulent transactions from 2004 to 2009. In November 2012, the company agreed to forfeit $100 million and enter into a deferred prosecution agreement with the Justice Department.
“In my job, I’ve met hundreds of compliance officers and I know them to be some of the most dedicated and trustworthy professionals in the financial industry,” FinCEN Director Jennifer Shasky Calvery said in a statement. “Haider’s failures are an affront to his peers and to his profession. With his willful violations, he created an environment where fraud and money laundering thrived and dirty money rampaged through the very system he was charged with protecting. His inaction led to personal savings lost and dreams ruined for thousands of victims.”
As bad as things may be for Haider, they could have been worse. Earlier this year, he was notified by FinCEN that it was considering a fine of as much as $5 million. He is also not the only compliance officer fined for anti-money laundering compliance failures this year. In February, the Financial Industry Regulatory Authority fined Harold Crawford, former global AML compliance officer for Brown Brothers Harriman, an investment bank and securities firm, $25,000 for substantial anti-money laundering compliance failures. The firm was also fined $8 million in the case for failing to have an adequate anti-money laundering program in place to monitor and detect suspicious penny stock transactions.