SHOULD A COMPLIANCE OFFICER RESIGN WHEN MANAGEMENT IGNORES HIS RECOMMENDATIONS ON REFORMS ?

The focus on assigning blame to the compliance officer, when regulators enact fines and penalties for anti-money laundering and other violations, when the deficiencies occurred on his or her watch, is increasing. Look at the penalties visited on the responsible compliance officer in the Brown Brothers Harriman & Co. case, or the eighteen month suspension of the individual who chose to ignore signs of tax evasion by clients from India, and you begin to see a trend; hit the individual who was the gatekeeper, as well as the company that he works for.

I know that you will tell me that senior management has declined to implement the critical reforms you suggested,  and that your hands are tied. The problem is that regulators are no longer satisfied with imposing fines and penalties on the bank or broker-dealer. They want to head of the responsible compliance professional as well. So what will you do ?

My candid advice, learned the hard way, when I served as a compliance officer at a billion-dollar investment firm; if your recommendations are not being adopted, and you see egregious and repeated AML/CFT deficiencies, you do not want to be there when the hammer falls, for it may also fall upon you.

My suggestions:

(1)  Resign forthwith; if you are as sharp I think you are, you will have already checked out other professional opportunities available to you.

(2) Make sure, before you depart, that you retain sufficient details regarding your history of urging that a meaningful and effective AML/CFT program be implemented. You will want to consult your attorney about the pros and cons of retaining specific information.

(3)  Your attorney may, after the consultation, advise you that he want to approach law enforcement or regulators first, ahead of the oncoming storm. There are issues to be resolved,  such as immunity from prosecution, whistle blower action, and other matters, which are best discussed with him, to protect not only your professional reputation, but possible criminal or civil liability on your part. Each case is different, and some investigations proceed at a fester pace than others, so do not waste any time seeking competent legal counsel, and that means retaining a criminal defense attorney, and possibly also other  help, experienced in dealing with Federal regulators.

Your career, and potentially your freedom, are at stake here; do not delay in taking action, lest you find yourself in a defensive position, one that you may not be able to extricate yourself from.