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Compliance Officers Beware

Recently, the U.S. government set an interesting precedent. Thomas Haider, MoneyGram’s Chief Compliance Officer (CCO) was sued in civil court for failing to prevent a $100 million wire fraud. The proposed fine was $1 million and a lifetime ban from the industry. This is the government’s first attempt to hold a compliance officer personally responsible. According to Todd Cipperman, founding principal of Cipperman Compliance Services, “Compliance officers find this case very troubling.” Understandably so.

For about five years, starting in 2004, scam artists sent “tens of thousands” of messages to individuals posing as family members needing money or claiming that the victim had won the lottery. The recipients of the notes then wired money to the perpetrators via MoneyGram. As a side note, I feel for the people who thought they were sending money to a family member but I do not have a lot of sympathy for people who thought they won the lottery. When you win the lottery, you do not pay someone else — that’s not how the lottery works. If you don’t understand that, then maybe you aren’t supposed to keep your money?

While it is unusual to hold a chief compliance officer personally responsible for a crime like this, Haider’s conduct is pretty egregious.

“Haider, who did not respond to a request for comment, also failed to close outlets that his subordinates had identified as suspect, according to the settlement filed in U.S. District Court in Minnesota. Among them were four outlets that had received a total of 150 complaints in a six-month period. Haider had been warned about their owner, James Ugoh, a Nigerian tribal chief who had emigrated to Toronto. ‘Toronto P.D. also called me — they think this agent is dirty,’ read an email Haider received from an internal watchdog.”


“As compliance chief, Haider was directly responsible for managing MoneyGram’s anti-fraud programs. But on his watch, MoneyGram admitted filing erroneous ‘suspicious activity reports’ with the Treasury Department that identified fraud victims as the fraudster, according to court documents.”

According to the U.S. Department of Justice, this behavior constitutes a “systematic, pervasive, and willful failure” to, you know, be compliant. So I guess the compliance officer should be held accountable. Another recent case related to compliance is the Wells Fargo scandal. Not holding the CCO accountable there makes a little sense since opening fake accounts for people looks an awful lot like opening real accounts for people — it’s easy to understand how you might get the two confused. But in Haider’s case, to receive 150 complaints in a six-month period for the same four locations, and then to see suspicious activity reports involving fraud victims does seem like a “systematic, pervasive, and willful failure.”


Open Office

The Wall Street Journal is finding that CEOs want their office walls back. The trend in recent years has been to move to open office architecture — for all staff, executives included. The most egregious example of this is when a company adopts a completely open floor plan, replete with a “sit anywhere” policy by which all desks are the same and you sit anywhere you want, any day of the week. This can be useful for collaborative teams that form and reform based on project directives; however, this can be a soul crushing experience for, well, anyone that is human. I can’t imagine working in an environment that is constantly telling me, “Hey, don’t get comfortable.”

According to The Journal, “As employees and managers squeeze closer together, productivity and morale have suffered. In a review of more than 100 studies of work environments, British researchers found that despite improving communication in some instances, open-office spaces hurt workers’ motivation and ability to focus.”

For those reasons, many CEOs are now migrating away from open offices and putting themselves back into a more traditional office space. The article further noted that Blake Harvey, of the Lawrence Blake Group, has turned away from the open space idea.

“Having his own space, he says, makes him feel more like a leader. After brainstorming or regrouping with some music or even watching an inspirational video, ‘I can get back out there with my Superman cape on.’”

Yes, watching videos at work is a great advantage of having your own office.


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