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Compliance Officers: Law Enforcement Partners or Targets?
In May 2014, Andrew Ceresney, then-Director of Enforcement of the U.S. Securities and Exchange Commission (SEC), in his keynote address at Compliance Week 2014, stated, “ …. legal and compliance officers who perform their responsibilities diligently, in good faith, and in compliance with the law are our partners and need not fear enforcement action.” Andrew Ceresney, Director of Division of Enforcement, SEC, Keynote Address at Compliance Week 2014 (May 20, 2014). In the same speech, however, Ceresney articulated the circumstances under which the SEC would bring actions against compliance officers, personally: “[W]hen the [SEC] believes … compliance personnel have affirmatively participated in the misconduct, when they have helped mislead regulators, or when they have clear responsibility to implement compliance programs or policies and wholly failed to carry out that responsibility.” Id.
In the years since that speech, law enforcement's ambivalence toward compliance officers has only become more pronounced. Compliance officers' potential exposure has become most apparent in the area of Bank Secrecy Act (BSA) and anti-money laundering (AML) regulation and enforcement.
Since the disclosure of the Panama Papers in April 2016, regulators in the United States and around the world have increasingly focused on enhancing BSA/AML rules and regulations, as well as ramping up criminal investigations and prosecutions. Coupled with regulators' public statements about holding individuals accountable for corporate misconduct across the enforcement spectrum, and regulators' increased emphasis on the effectiveness of corporate compliance programs, generally, compliance officers have found themselves at the center of regulatory and criminal investigations focused on BSA/AML compliance. Of most concern to compliance officers, this regulatory scrutiny tends not to be based on their own participation in the money laundering or fraudulent activity, but rather on their alleged failures to ensure that the compliance and AML programs that they oversee effectively detect and prevent illegal conduct.
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