Compliance chart with keywords and icons. Flat designOur guest blogger is a Certified Compliance & Ethics Professional (CCEP)®.

Increased scrutiny for Chief Compliance Officers

Compliance officers are facing increasing scrutiny from a variety of regulatory agencies. The Department of Justice and the Securities Exchange Commission have announced their intention to hold companies accountable through the individuals involved.  As a result, many in the compliance industry have stated that the personal risk involved in being a chief compliance officer is becoming deeply concerning.  Such concerns are not unfounded, but people in compliance must also recognize that they hold a unique position of trust, requiring a higher level of responsibility to ensure that risks are recognized and effectively mitigated and that regulations are closely followed.

First individual Chief Compliance Officer held accountable by FinCEN

Earlier this month, the U.S. Treasury Department’s  Financial Crimes Enforcement Network (“FinCEN”) settled its first suit ever filed against an individual compliance officer in the financial industry.  Thomas Haider, the former Chief Compliance Officer for MoneyGram International, Inc., agreed to a three-year injunction barring him from performing compliance functions for any money transmitter.  In addition, Haider will pay a $250,000 penalty.

What did Haider do to become the first financial compliance officer to be assessed a civil monetary penalty? After all, FinCEN had already entered into a deferred prosecution agreement with MoneyGram in 2012, under which MoneyGram forfeited $100 million and agreed to an independent compliance monitor.  In addition, MoneyGram had settled consumer fraud claims with the FTC in 2009 by paying an $18 million penalty.

Willfully blind or reckless?

FinCEN’s announcement of the assessment of a $ 1 million civil penalty against Haider in December 2014 stated that he not only willfully violated the requirement to implement and maintain an effective anti-money laundering (“AML”) program, but he also willfully violated the requirement to report suspicious activity  under the federal Bank Secrecy Act (“BSA”).  Under the BSA, the government does not have to prove knowledge, improper motive or bad purpose to establish that an individual acted willfully.  Rather, it is only necessary to  demonstrate  reckless disregard or willful blindness.

In Haider’s case, he was the chief compliance officer from 2003 through May 23, 2008, and had authority over both the fraud and the AML compliance departments. During this period, despite having been told by MoneyGram’s Fraud Department, as well as outside counsel and consultants of the need to implement certain policies and procedures due to high risks of possible fraud and money laundering activities, Haider failed to:

  • Implement a discipline policy;
  • Terminate high risk agents;
  • File timely suspicious activity reports (“SARs”);
  • Conduct effective audits; and
  • Conduct adequate due diligence.

Considering that under the BSA an individual can be assessed $25,000 for each day for lacking an effective AML program as well as $25,000 a day (up to $100,000) for each failure to file a company SAR, it appears that Haider may have gotten a pretty good deal.  FinCen stated that from approximately January 2004 through May  2008, over 30,000 consumer fraud reports were filed, totaling close to $60 million in losses.  Yet, FinCen determined, Haider “siloed” MoneyGram’s fraud department from the analysts who were  responsible for filing the SARs, effectively negating any chance of proper action – despite multiple guidance sources reiterating the importance of sharing information between departments.

Great power, great responsibility

Bottom line is that those who are given the authority or power must follow through to ensure that policies, procedures and controls are in place, as well as ongoing employee training and independent audits, in order to test whether the compliance program functions commensurate with the risks of the organization.

Ben Parker’s line from the Spiderman movie is appropriate here: “With great power comes great responsibility.” Acting FinCEN director Jamal El-Hindi summed up the responsibility of those in the compliance field: “Compliance professionals occupy unique positions of trust . . . when that trust is broken, it is important that we take action so that reputations of thousands of talented compliance officers are not diminished by any one individual’s outlying egregious actions.”

 

ThankfulnessLast year at this time, we published this post on gratitude, and it resonated with a lot of lawyers.  Here it is again, slightly revised.  Have a grateful Thanksgiving holiday.

Looking at the roiling current of world events, many of them dark and discouraging, can justifiably make us anxious and depressed.  Our times seem indelibly marked by war, political turmoil, terrorism, desperate migration, environmental degradation, siege.  But here in the U.S., we will nonetheless sit down on Thanksgiving  Day with family and friends for a shared meal that is the proper antithesis — perhaps the strongest one — to hate, death and destruction.

And while you are feeling generally grateful, you should also think about your life in the law, in particular.  Academic legal scholars have examined the trait of gratitude and how it is and can be expressed in our chosen profession.

In her excellent 2012 article, which appeared in the Notre Dame Journal of Law, Ethics & Public Policy, author Reed Elizabeth Loder says that “Gratitude might be a curious topic at a time that the public maligns, even demonizes lawyers.  Asking lawyers to endure social scorn and yet feel thankful seems a double insult.  Yet … every lawyer should cultivate, feel, and act upon a special type of gratitude — call it legal gratitude.”

Cultivating this attitude, says Loder, can be a “sustaining source of ethical inspiration to lawyers.”  Having that inspiration can provide us with the outlook we need if we are to survive in our challenging profession with our inmost beings intact.

So here are five reasons to specifically be thankful for being a lawyer.

  • Our knowledge, skill and training are gifts.  Whether a GC of a Fortune 500, or a contract lawyer doing document review, we should recognize that we have achieved a privileged status in society that has improved our own lives, and created personal opportunities.  Even if we have earned our professional status by our own hard work, we have to acknowledge that we have “social and personal privileges” by virtue of the generally just society that permitted us to acquire our status, Loder writes.  “Whereas citizens owe gratitude to their government for general belonging and public benefits, the lawyer owes special gratitude for a legal heritage that bestows greater than normal benefits.  For this aura surrounding a life in the law, the lawyer should feel grateful.”
  • Our work has purpose.  More important than the concrete social advantages that being a lawyer brings to us, “are the possibilities a lawyer acquires for a meaningful professional and personal life.  The law is a worthy profession because it serves the intrinsic good of justice … Unlike many forms of work, legal work has an overarching purpose as its measure.”  Even when we struggle to find that purpose in the face of moral and practical uncertainty, “it is a privilege to have some standard of goodness” by which we calibrate our professional integrity.
  • We have the ability to change society.  “Because law is so central in a contemporary society that has few other shared cultural moorings, the lawyer is privileged to effectuate social changes that few have the power even to touch.  … Lawyers can influence, to small or large extent, legal reform and justice in particular cases.”
  • We have the opportunity to help.  As Loder says, “there is never a shortage of satisfying work for those lawyers who can make time to donate their expertise to represent otherwise voiceless clients or causes.”
  • We have the opportunity to grow personally.  Whatever you call your inner being — your soul, your psyche, your character — being a lawyer presents an incredible opportunity to refine and perfect it.   This concept may get lost in the hurly burly of daily practice, with its competitiveness and all the ordinary encounters we have that can diminish and dispirit us.  But at bottom, as Loder puts it, “the legal experiences that spur lawyers to perfect their craft and cultivate personal traits like patience and fortitude are the sources of gratitude.”

Our privileged position in society, the chance to do good work and serve a just system, the opportunity to serve others — all these build our own capacity for generosity and caring, and bring meaning to our own lives.

For these things, we should be grateful.

The Law for Lawyers Today will be taking a short break over the Xmas holiday.  But we’ll be back on December 31 with our thoughts about the past year in Ethics World and predictions for 2016!

Snow covered birch trees

ThankfulnessThe world has been through dark things in the past couple weeks.  But here in the U.S., we will nonetheless sit down on Thanksgiving  Day with family and friends for a shared meal that is the proper antithesis — perhaps the strongest one — to hate, death and destruction.

And while you are feeling generally grateful, you should know that academic legal scholars have examined the trait of gratitude and how it is and can be expressed in your life as a lawyer.

In her excellent 2012 article, which appeared in the Notre Dame Journal of Law, Ethics & Public Policy, author Reed Elizabeth Loder says that “Gratitude might be a curious topic at a time that the public maligns, even demonizes lawyers.  Asking lawyers to endure social scorn and yet feel thankful seems a double insult.  Yet … every lawyer should cultivate, feel, and act upon a special type of gratitude — call it legal gratitude.”  Cultivating this attitude, says Loder, can be a “sustaining source of ethical inspiration to lawyers.”  Having that inspiration can provide us with the outlook we need if we are to survive in our challenging profession with our inmost beings intact.

So here are five reasons to specifically be thankful for being a lawyer.

  • Our knowledge, skill and training are gifts.  Whether a GC of a Fortune 500, or a contract lawyer doing document review, we should recognize that we have achieved a privileged status in society that has improved our own lives, and created personal opportunities.  Even if we have earned our professional status by our own hard work, we have to acknowledge that we have “social and personal privileges” by virtue of the generally just society that permitted us to acquire our status, Loder writes.  “Whereas citizens owe gratitude to their government for general belonging and public benefits, the lawyer owes special gratitude for a legal heritage that bestows greater than normal benefits.  For this aura surrounding a life in the law, the lawyer should feel grateful.”
  • Our work has purpose.  More important than the concrete social advantages that being a lawyer brings to us, “are the possibilities a lawyer acquires for a meaningful professional and personal life.  The law is a worthy profession because it serves the intrinsic good of justice … Unlike many forms of work, legal work has an overarching purpose as its measure.”  Even when we struggle to find that purpose in the face of moral and practical uncertainty, “it is a privilege to have some standard of goodness” by which we calibrate our professional integrity.
  • We have the ability to change society.  “Because law is so central in a contemporary society that has few other shared cultural moorings, the lawyer is privileged to effectuate social changes that few have the power even to touch.  … Lawyers can influence, to small or large extent, legal reform and justice in particular cases.”
  • We have the opportunity to help.  As Loder says, “there is never a shortage of satisfying work for those lawyers who can make time to donate their expertise to represent otherwise voiceless clients or causes.”
  • We have the opportunity to grow personally.  Whatever you call your inner being — your soul, your psyche, your character — being a lawyer presents an incredible opportunity to refine and perfect it.   This concept may get lost in the hurly burly of daily practice, with its competitiveness and all the ordinary encounters we have that can diminish and dispirit us.  But at bottom, as Loder puts it, “the legal experiences that spur lawyers to perfect their craft and cultivate personal traits like patience and fortitude are the sources of gratitude.”

Our privileged position in society, the chance to do good work and serve a just system, the opportunity to serve others — all these build our own capacity for generosity and caring, and bring meaning to our own lives.

For these things, we should be grateful.

Snow covered birch treesThe Law for Lawyers Today will be taking a short break over the holidays.  We’ll be back with fresh and timely updates on January 8, 2015!

Snow covered birch treesThe Law for Lawyers Today will be taking a short break over the holidays.  We’ll be back with fresh and timely updates on January 8, 2015!