Week In Compliance: Bankers believe that their employees do not want overtime pay

American Bankers Association reports that banks believe their overtime exempt employees do not want overtime pay, as stated by Christeena Naser, Vice President and Sr Counsel. This opinion stems from the Department of Labor’s new interpretation of the Primary Duty Test. “The term “primary duty” means the principal, main, major or most important duty that the employee performs. Determination of an employee’s primary duty must be based on all the facts in a particular case, with the major emphasis on the character of the employee’s job as a whole.” (DOL). ABA goes onto to state that the Test’s objective was to identify obvious non-exempt employees, but the new interpretation would seem to try to identify obvious exempt employees. The difference in nearly $27,000, or about 30 Million employees across all industries.

The Financial Crimes Enforcement Network (FinCEN) today announced a settlement with Desert Palace, Inc. d/b/a Caesars Palace where Caesars agreed to pay an $8 million civil money penalty for its willful and repeated violations of the Bank Secrecy Act. In addition, the casino agreed to conduct periodic external audits and independent testing of its anti-money laundering compliance program, report to FinCEN on mandated improvements, adopt a rigorous training regime, and engage in a “look-back” for suspicious transactions. – FinCEN

CFPB reported that it has handled 677,200 complaints nationally. – SubPrime Auto Finance News Staff

Big companies are some of the worst offenders in foreign corruption cases, but they are also increasingly policing themselves and self-reporting instances of bribery, new data show. The Organization for Economic Cooperation and Development analyzed 427 cases of foreign bribery in 17 countries to determine who’s bribing who, and how authorities are discovering corrupt practices. – Kathleen Caulderwood at International Business Times

FTC can sue companies for inadequate cyber-security protection, so says the United States Court of Appeals for the Third Circuit. – Dan Appleman at FCPA Blog

Caesar’s Palace to pay $8 Million penalty on poor compliance regime. FinCEN has also forced the Palace to take on additional action for boosting compliance an a lookback program to seek noncompliance in past transactions. “When it came to watching out for illicit activity, [Caesar’s Palace] allowed a blind spot in its compliance program,” says Jennifer Shasky, director at FinCEN.

“Whistle-blowers and insiders play an increasingly important role in our work,” says David Green, Director of the Serious Fraud Office in the UK. “I suggest… moving away from the identification principle of corporate criminal liability in English law and embracing something closer to vicarious liability, as in the USA,” he said in his speech at the 33rd Cambridge Economic Crime Symposium.

By performing an assessment of OFAC compliance programs and establishing a culture of compliance throughout the organization, a company can position itself to better understand and identify potential risk exposure. – Sven Stumbauer, Director in the Financial Crimes Compliance Practice at AlixPartners, LLP at International Banker

Jobs In Compliance

Opinion: FRB of Boston says Prepaid cards can be a savings tool, and I agree 

credit Danny Choo

Prepaid cards from credit card companies have grown significantly in the past decade. They offer credit transactions to those who do not have the credit history to have credit cards. They offer a way to build credit for those who cannot even open a bank account. These are people and families who make $25,000 or less. If you are reading this, you are very likely a person with a bank account and a credit card. You might not know, but there are people who do not qualify to have a bank account. I was once such a person. But I wasn’t the norm of such a person. I had graduated from college and I didn’t yet have a job. During college, I had a college student checking out. I was moving back home 2,000 miles away from my bank. So, I needed a local bank. Wells Fargo said that I had overdrafted too many times and I do not have a history of income that would otherwise let them overlooking this. I was shocked. I didn’t know that banks refused to open checking accounts. Even more astonishing, this was at a time when checking account were not free. I went down the street to Key Bank, who opened an account for me. I got a job and Key Bank had my business for many years. But most people who do not qualify for checking account aren’t in my position. They have never made enough money to have any savings at all, which means even if they had a checking account, it would sit empty. Even having an account for someone open a bank up to various risks, which all have a cost. But financial institutions have come up with a solution: Prepaid Card. This uses the credit network for transactions but at no time transactions beyond the amount in the card can be made. And banks do not have to offer any services, keeping all of the information on the card. Actually, in Eastern Africa, the same type of decentralized banking system is growing through cellphones. And if you think about it a little longer, Bitcoin and other cyber-currencies are just another decentralized payment system, albeit with more value involved. What Prepaid Cards offer is not merely a way to make transactions. It can be method to store value, as economists would put it. That is, a person can save money in such cards. The difference for the user is minimal for the most part. Sure, it is less secure because if you lose it, you’ve lost all of your money, just like cash. But it is safer than cash since it is possible to have an account on that card, even though it wouldn’t have any of the protections of a checking account. At least, there would be a remote way to stop transactions on that card, if lost, unlike cash. For the financial system, prepaid cards balances cannot be used to lend money. But banks are not starved for money right now. The Federal Reserve is offering money below the inflation rate, which means, banks are being paid to just hold money. The card balance does not flow through the system until it is used for a transaction, but it a clear benefit to the consumer who cannot afford to be connected to the financial system through depository banking. For banks, it allows them to have a credit history on those people should they eventually want to join the financial system. The banks also make money on the credit transaction. And for the system as a whole, it reduces risks involving money laundering, fraud, theft and cyber crimes.

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Marcus Maltempo is a compliance professional with more than a decade of experience helping banks, law firms and clients manage investigations and regulatory responses. He is a member of ACAMS and ACFE. 

Visa: Everywhere you want to be (in the US)



Last month, US arrested Zhao Shilan and her ex husband Qiao Jianjun, both 51, in Newcastle, Washington, a suburb of Seattle. This isn’t the normal visa fraud story. It has multiple parts.

House in Newcastle, WA from South China Morning Post
House in Newcastle, WA from South China Morning Post

US has laws that allow a wealthy foreigners to own a business in the US with an investment of at least $500,000 and must create some jobs to gain a visa, specifically an EB-5. The idea is to encourage foreign direct investment. The minimum required is $500,000. The Chinese couple, they were married at the time, bought a home in Newcastle for $500,000.

Here’s the string of lies:

  • Zhou and Qiao are married, but they aren’t, so, Qiao doesn’t qualify as family.
  • Neither owns any business in China.
  • Qiao performed an illegal transaction at a grain storehouse, where he was a director, to acquire the funds for this real estate purchase.

Zhou has been arrested and faces charges for immigration fraud and money laundering, which could land her in jail for 30 years if she were to do them consecutively. Qiao is a fugitive and has not been found.

Qiao Jianjun from The Chinese Journal
Qiao Jianjun from The Chinese Journal

About the Author: Marcus Maltempo is a compliance professional with more than a decade of experience helping banks, law firms and clients manage investigations and regulatory responses. He is the author of the forthcoming book History of Money Laundering: How criminals got paid and got away.


In Corporate Crimes, Individual Accountability Is Elusive


The Department of Justice has filed over 46,000 cases against individuals for mortgage fraud since the Great Recession. Aside from Lee B. Farkas, former Chairman of Taylor, Bean & Whitaker serving a 30-year sentence, all of the other cases have been against low level employees who do not have any name recognition or even any responsibilities for much of their organizations.

from Leom Lime Moon at Blogspot


The main take away is that managers really have no liabilities. The rationale seems to be that managers are not licensed professionals, so they don’t have a higher standard to meet. The main higher standard might be that a lack of knowledge absolves them of accountable because they do not have a professional’s training and certification. How could a non-professional be accountable for knowledge s/he has no knowledge about? A professional would be liable for knowing certain things about their work and if s/he doesn’t know, then the professional is accountable for not doing his/her job correctly.


Here’s my stance on all this. The solution isn’t to prosecute non-professional managers for things they should have known. There is nothing in corporate charters that require managers to be professionals. (Here, I’m using the word professional in the traditional sense, a person who is licensed to practice a certain craft or use certain knowledge.) The solution is to make managing professionals a profession. Currently, banks are managed by people who don’t really know how to operate their own banks; they know how to manage the people who do. But shouldn’t they know how their bank operates? The answer, in my opinion, is “yes.”

So, while I don’t believe that bank holding companies need to be managed by professionals because what is needed at that level is quite different than individual bank units, these individual units should be managed by professionals in and of that field. Projecting out, what will happen in the future with this standard in place would be that future bank holding company executives will be a banker from those units.

A small group of people have argued that bank executives are professionals because almost all of them come from investment banking backgrounds and they hold Series licenses from FINRA. The problem there is that taking away their license to sell securities does not bar them from managing a people who do, let alone other bank units. My solution would solve this for the most part because people will not be allowed to climb the ladder of another bank unit without that license required to practice in that bank unit.

Economically, what will happen is that this will allow large bank holding companies to exist. But this standard will force units to shrink and many more units be created. The pyramid will be at the state-level, and executives will be plucked from those levels. Large national banks may have multi-state regions but those will also be led by former state-level unit managers, making them at least accountable for maintaining the professional standards of one profession. Eventually, the only qualified national bank managers will be people who used to run banks.

About the Author: Marcus Maltempo is a compliance professional with more than a decade of experience helping banks, law firms and clients manage investigations and regulatory responses.

DPA Means Deferred Prosecution Agreement

Deferred prosecution agreements (DPAs) encourage individuals and companies to provide the SEC with forthcoming information about misconduct and assist with a subsequent investigation. In return, the SEC refrains from prosecuting cooperators for their own violations if they comply with certain undertakings. – SEC

DPA’s are also used by the DOJ.

For a company or an individual who may have unwittingly been involved in financial crime, DPA is often the best option. There are two main types of DPA’s, with and without admission of violation.

Obviously, not admitting to violation is the best option. This option can only be provided if the violator’s intended results were not a violation in themselves. This doesn’t mean it’s the end of the violator’s troubles. The violator may face professional punishments if s/he is licensed or certified. In rare cases, the violator will be barred from the profession.

Wolf of Wall Street by Martin Scorsese via Aerometal

Admitting to the violation only strengthens the case against the violator’s disbarment. On top of that, the violator may face disbarment from the industry regardless of the function. Admission could be career suicide.

It used to be that corporations wanted to avoid admission because it meant suicide for the corporation. But last year, the regulators showed their willingness to work with corporations on leniency, if that’s what it can be called. A number of corporations entered into agreements to admit to wrong doing and pay hefty violations but DPA’s were executed in such a way so that corporations may have taken a hit to their assets, but the shareholders’ equity would not be affected.

About the Author: Marcus Maltempo is a compliance professional with more than a decade of experience helping banks, law firms and clients manage investigations and regulatory responses.

FCPA Means Foreign Corrupt Practices Act

Foreign Corrupt Practices Act (FCPA) is a legislation that prohibits publicly traded companies and their agents from bribing foreign officials and related-agents for business. Its goal is to stop bribery in all its forms so that companies compete in the market by lowering prices, producing better goods and providing better services. FCPA is a broadly defined.

The Department of Justice (DOJ) and Securities And Exchange Commission (SEC) are in charge of enforcement. the SEC has produced a resource guide along with a section of its website dedicated to topics related to this legislation. The legislation was enacted in 1977. The DOJ has also provided the Act in its entirety, but it is good to keep in mind that there is extensive case law that has provided interpretations to the Act’s language. The DOJ provides an extensive database of related opinions to help a professional navigate the changing nature of interpretation.


About the Author: Marcus Maltempo is a compliance professional with more than a decade of experience helping banks, law firms and clients manage investigations and regulatory responses.