CCO Liable for AML Financial Penalties (part 2 of 7)



On November 17th, Todd Cipperman spoke on the topic of "The Evolving Regulatory Landscape - Practical Insights for Compliance Officers" at a webinar co hosted by MyComplianceOffice and Cipperman Compliance Services LLC. This is the second post of a seven part series which will address some of the topics covered by Todd during the webinar. You can watch videos of that webinar here.

A federal court has ruled that a Chief Compliance Officer may be held liable for significant financial penalties for failing to implement an adequate anti-money laundering compliance program under the Bank Secrecy Act.  The Treasury Department’s Financial Crimes Enforcement Network (FinCEN) assessed a $1 Million fine against the CCO, which FinCEN argued was less that the $25,000 per violation that it could have assessed for failing to file Suspicious Activity Reports (as much as $4.75 Million).  Relying on statutory interpretation, the Court denied the CCO’s motion to dismiss based on his argument that the BSA’s financial penalty provisions only applied to financial institutions and not to individuals.  The Court explained that the “plain language of the statute provides that a civil penalty may be imposed on corporate officers and employees” who are “responsible for designing and overseeing” the AML program. 

OUR TAKE: FinCEN has recently proposed applying its AML requirements to investment advisers.  Very few CCOs make the type of compensation that warrants assuming these types of financial penalties.  

Author of post: Todd Cipperman, Cipperman Compliance Services LLC

This is the second post in our seven-part series following a webinar with Todd Cipperman on "The Evolving Regulatory Landscape - Practical Insights for Compliance Officers" . Subscribe to get notified of part 3, "Under-Resourced Compliance Department Leads to Enforcement Action for Illegal Cross-Trading (In re Aviva Investors; 9/27/16)".

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