The Treasury Department's Financial Crimes Enforcement Network reportedly notified a former chief compliance officer of MoneyGram International that he could be fined up to $5 million for compliance failures that resulted in a widespread money-laundering fraud scheme.

FinCEN sent a letter several months ago to Thomas Haider, former chief compliance officer at MoneyGram, notifying him of the potential penalty, sources familiar with the matter told Reuters. In May, Haider and his legal counsel are expected to meet with FinCEN officials to contest the fine, the sources said.

In November 2012, MoneyGram agreed to forfeit $100 million and enter into a deferred prosecution agreement with the Justice Department to resolve criminal charges for aiding and abetting wire fraud and failing to maintain an effective anti-money laundering program in violation of the Bank Secrecy Act.

According to court documents, MoneyGram processed thousands of transactions for its own agents known to be involved in an international scheme that defrauded tens of thousands of members of the U.S. public out of at least $100 million. MoneyGram profited from the scheme by collecting fees and other revenues on the fraudulent transactions from 2004 to 2009.

Court documents showed that MoneyGram failed to meet its AML obligations by, among other things, failing to:

Implement policies or procedures governing the termination of agents involved in fraud or money laundering;

Implement policies or procedures to file the required Suspicious Activity Reports (SARs) when victims reported fraud to MoneyGram on transactions over $2,000;

File SARs on agents known to be involved in the fraud;

Conduct effective AML audits of its agents and outlets;

Conduct adequate due diligence on prospective and existing MoneyGram agents by verifying that a legitimate business existed; and

Sufficiently resource and staff its AML program.

According to his LinkedIn profile, Haider left MoneyGram in 2008 after 16 years with the firm. He's now chief advocacy officer at Cornerstone Credit Union League, where he leads the state and federal government relations programs for the non-profit group's 600 credit unions in Texas, Oklahoma, and Arkansas.

Other AML Case

Haider would not be the only compliance officer fined for anti-money laundering compliance failures in recent months. In February, the Financial Industry Regulatory Authority fined Harold Crawford, former global AML compliance officer for Brown Brothers Harriman (BBH), an investment bank and securities firm, $25,000 for substantial anti-money laundering compliance failures. BBH was also fined $8 million in the case.  

According to FINRA, BBH failed to have an adequate anti-money laundering program in place to monitor and detect suspicious penny stock transactions. Penny stock transactions pose heightened risks because low-priced securities may be manipulated by fraudsters.

BBH executed transactions, or delivered securities, involving at least six billion shares of penny stocks, many on behalf of undisclosed customers of foreign banks in known bank secrecy havens. BBH executed these transactions despite the fact that it was unable to obtain information essential to verify that the stocks were free trading, FINRA stated.

In many instances, BBH lacked such basic information as the identity of the stock's beneficial owner, the circumstances under which the stock was obtained, and the seller's relationship to the issuer. Penny stock transactions generated at least $850 million in proceeds for BBH's customers.

FINRA also found that, although BBH was aware that customers were depositing and selling large blocks of penny stocks, it failed to ensure that its supervisory reviews were adequate to determine whether the securities were part of an illegal unregistered distribution.

BBH and Crawford neither admitted nor denied the charges, but consented to the entry of FINRA's findings.

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