ABA Banking Journal - September/October 2017 - 18

> LEGAL BRIEFS

In the Hot Seat
BY DAWN CAUSEY, THOMAS PINDER
AND ANDREW DOERSAM

NATASHA TAFT THOUGHT she was just doing her job.
As chief compliance officer for the
New York branch of the Agricultural
Bank of China, she filed a
whistleblower complaint in response
to the bank's refusal to correct
BSA violations she discovered: that
customer payments over the SWIFT
network were using a bank-to-bank
format to purportedly hide information
regarding the transmitter and
recipient. She even sent a memo to
the Federal Reserve Bank of New
York outlining the bank's purported
violations and sought guidance as to
the suspected transactions.

Many chief compliance
officers often find
themselves caught
between a rock and
a hard place when
reporting AML/BSA
violations.

But then, Taft claimed, her
supervisors became furious and
sought to punish her for exposing
the bank's compliance deficiencies,
ultimately leading to her termination.
In the end, she was forced to file
a whistleblower retaliation lawsuit
against the bank.

When CCOs report a possible AML/BSA
violation to a regulator, for example,
they could face a backlash from their
employer. Alternatively, when CCOs
recommend compliance fixes that
are ignored by management, they
themselves can be held liable by
regulators for not doing their job.

Taft beat the bank's motion to dismiss
and later settled. The court found
that Taft plausibly pled facts to show
that she acted independently of the
bank because the bank engaged in
a concerted effort to stop Taft from
raising her concerns.

Take the case of Thomas Haider,
former CCO at MoneyGram. In May
of this year, Haider agreed to pay
$250,000 to settle AML violations with
the Financial Crimes Enforcement
Network. Haider reluctantly admitted
that he failed to conduct adequate
audits of MoneyGram's agents
suspected of engaging in fraud
and failed to implement a policy for
terminating or disciplining agents that
presented a high risk of fraud. Haider
also agreed to a three-year ban on
working for any money transmitter.

Certainly Taft went above and
beyond to spearhead correcting
the compliance violation while still
maintaining her integrity along
the way. But her story echoes the
experience of many chief compliance
officers who often find themselves
caught between a rock and a
hard place when reporting AML/
BSA violations.
18

ABA BANKING JOURNAL | SEPTEMBER/OCTOBER 2017

Was Haider an ineffective CCO or a
compliance scapegoat? By his account,
he supported the fraud department's

proposals to terminate and discipline
agents, but his recommendations
were ignored by the sales division
that had the authority to implement
the recommendations. MoneyGram's
AML programs were audited by
regulators and outside consultants,
but none of the reviews flagged any of
FinCEN's findings.
Similarly, the FDIC determined that
a former CCO at Banamex USA
was liable for failing to discover that
the bank processed over 30 million
remittance transactions to Mexico
worth $8.8 billion, imposing a $70,000
fine and a bank employment ban.
Although the FDIC alleged that the CCO
exhibited a "continuing disregard for
the safety or soundness of the bank"
that caused the compliance lapses, it
appeared to ignore that the CCO was
proactive in making recommendations
to senior management regarding the
BSA compliance.
The regulators' untested theories
of liability are still up in the air and
inconsistent. The Taft case places a
high bar for CCOs to avoid liability. One
solution would be for regulators to find
a pathway to improve their working
relationship with CCOs.
After all, CCOs are on the front lines
and can stand the heat. But with the
unfair burden placed on them by the
regulators, who would blame them for
getting out of the kitchen?
DAWN CAUSEY is general counsel at ABA,
where THOMAS PINDER is SVP for litigation and
ANDREW DOERSAM is a paralegal.



Table of Contents for the Digital Edition of ABA Banking Journal - September/October 2017

CHAIRMAN’S VIEW
UPFRONT
PICTURE THIS
LEGAL BRIEFS
POWER UP PROFILE
THE TOP FINTECH TRENDS DRIVING THE NEXT DECADE
PLUG AND PLAY: FOUR WAYS TO LEVEL UP YOUR MOBILE BANKING APP
MAKING FRIENDS WITH FINTECH
LOOKING AT FINTECH THROUGH THE LEGISLATIVE LENS
LET’S TALK PAYMENTS
IS OUTSOURCING IT SECURITY RIGHT FOR YOUR BANK?
THE CECL RIPPLE EFFECT
FROM YOUNG AMERICANS TO ENTREPRENEURIAL CITIZENS
FINDING THE PERFECT NICHE
THREE ELEMENTS OF BANK LEADERSHIP
REAL ESTATE LENDING
ABA COMPLIANCE CENTER INBOX
WEALTH MANAGEMENT
FROM THE STATES
CORPORATE SOCIAL RESPONSIBILITY
INDEX OF ADVERTISERS
FROM THE VAULT
ABA Banking Journal - September/October 2017 - Intro
ABA Banking Journal - September/October 2017 - bellyband1
ABA Banking Journal - September/October 2017 - bellyband2
ABA Banking Journal - September/October 2017 - cover1
ABA Banking Journal - September/October 2017 - cover2
ABA Banking Journal - September/October 2017 - 3
ABA Banking Journal - September/October 2017 - 4
ABA Banking Journal - September/October 2017 - 5
ABA Banking Journal - September/October 2017 - 6
ABA Banking Journal - September/October 2017 - 7
ABA Banking Journal - September/October 2017 - CHAIRMAN’S VIEW
ABA Banking Journal - September/October 2017 - 9
ABA Banking Journal - September/October 2017 - 10
ABA Banking Journal - September/October 2017 - UPFRONT
ABA Banking Journal - September/October 2017 - 12
ABA Banking Journal - September/October 2017 - 13
ABA Banking Journal - September/October 2017 - 14
ABA Banking Journal - September/October 2017 - 15
ABA Banking Journal - September/October 2017 - PICTURE THIS
ABA Banking Journal - September/October 2017 - 17
ABA Banking Journal - September/October 2017 - LEGAL BRIEFS
ABA Banking Journal - September/October 2017 - 19
ABA Banking Journal - September/October 2017 - POWER UP PROFILE
ABA Banking Journal - September/October 2017 - 21
ABA Banking Journal - September/October 2017 - THE TOP FINTECH TRENDS DRIVING THE NEXT DECADE
ABA Banking Journal - September/October 2017 - 23
ABA Banking Journal - September/October 2017 - 24
ABA Banking Journal - September/October 2017 - 25
ABA Banking Journal - September/October 2017 - 26
ABA Banking Journal - September/October 2017 - 27
ABA Banking Journal - September/October 2017 - PLUG AND PLAY: FOUR WAYS TO LEVEL UP YOUR MOBILE BANKING APP
ABA Banking Journal - September/October 2017 - 29
ABA Banking Journal - September/October 2017 - 30
ABA Banking Journal - September/October 2017 - 31
ABA Banking Journal - September/October 2017 - MAKING FRIENDS WITH FINTECH
ABA Banking Journal - September/October 2017 - 33
ABA Banking Journal - September/October 2017 - LOOKING AT FINTECH THROUGH THE LEGISLATIVE LENS
ABA Banking Journal - September/October 2017 - 35
ABA Banking Journal - September/October 2017 - LET’S TALK PAYMENTS
ABA Banking Journal - September/October 2017 - 37
ABA Banking Journal - September/October 2017 - 38
ABA Banking Journal - September/October 2017 - IS OUTSOURCING IT SECURITY RIGHT FOR YOUR BANK?
ABA Banking Journal - September/October 2017 - THE CECL RIPPLE EFFECT
ABA Banking Journal - September/October 2017 - 41
ABA Banking Journal - September/October 2017 - 42
ABA Banking Journal - September/October 2017 - FROM YOUNG AMERICANS TO ENTREPRENEURIAL CITIZENS
ABA Banking Journal - September/October 2017 - 44
ABA Banking Journal - September/October 2017 - 45
ABA Banking Journal - September/October 2017 - 46
ABA Banking Journal - September/October 2017 - FINDING THE PERFECT NICHE
ABA Banking Journal - September/October 2017 - 48
ABA Banking Journal - September/October 2017 - 49
ABA Banking Journal - September/October 2017 - 50
ABA Banking Journal - September/October 2017 - THREE ELEMENTS OF BANK LEADERSHIP
ABA Banking Journal - September/October 2017 - 52
ABA Banking Journal - September/October 2017 - 53
ABA Banking Journal - September/October 2017 - REAL ESTATE LENDING
ABA Banking Journal - September/October 2017 - 55
ABA Banking Journal - September/October 2017 - 56
ABA Banking Journal - September/October 2017 - 57
ABA Banking Journal - September/October 2017 - 58
ABA Banking Journal - September/October 2017 - 59
ABA Banking Journal - September/October 2017 - ABA COMPLIANCE CENTER INBOX
ABA Banking Journal - September/October 2017 - 61
ABA Banking Journal - September/October 2017 - WEALTH MANAGEMENT
ABA Banking Journal - September/October 2017 - FROM THE STATES
ABA Banking Journal - September/October 2017 - CORPORATE SOCIAL RESPONSIBILITY
ABA Banking Journal - September/October 2017 - INDEX OF ADVERTISERS
ABA Banking Journal - September/October 2017 - FROM THE VAULT
ABA Banking Journal - September/October 2017 - cover3
ABA Banking Journal - September/October 2017 - cover4
ABA Banking Journal - September/October 2017 - outsert1
ABA Banking Journal - September/October 2017 - outsert2
ABA Banking Journal - September/October 2017 - outsert3
ABA Banking Journal - September/October 2017 - outsert4
ABA Banking Journal - September/October 2017 - outsert5
ABA Banking Journal - September/October 2017 - outsert6
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