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. 

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China’s Complicated Compliance

Shanghai Stock Exchange

China has many of the same compliance rules in its stock market exchanges as the major exchanges around the world. But as with many other things in China, there is an unavoidable twist.

The recent drops in the market at the Shanghai Stock Exchange has uncovered some of the nastiness that had been hidden. A recent report came out stating that state-owned Citic Securities has found price manipulation going on by its employees. This seems like a simple case since it is the work of a group of employees. Fire and prosecute those employees.

But is it that simple?

The police investigators have uncovered a government-promoted vicious cycle. If the employees were doing what they were supposed to, then they were supposed to help the state manipulate the price of stocks higher.

Here’s how it works. The government promotes to Chinese citizens to invest in the market, which Citic Securities, along with others, sell shares. Citic and their counterparts are supposed to, then, drive the price of the stock up so that the investors are richer. Citic, of course, receives a portion of the rise in the market. And, as long as Citic continues its role as price drivers, the China Securities Regulatory Commission has no problem with it.

Since providing false information is important for the Chinese government, sending the true information might get you in trouble. While it is unknown about what happened at Citic specifically, but the Chinese news agency The People’s Daily Online is taking a hit. Its Editor in Chief has been arrested. A little too much truth slipped through the censorship, one might guess. The charge, one would assume, would be spreading false information, although “false” would have to be qualified in this case.

So, now it is up to the CSRC to prosecute this case. CSRC has the difficult job of seeking actions taken by these employees that show the Chinese people that the Citic employees were not doing what Citic wanted them to do and the means of which they were doing their illegal activity was for their own benefit. Both need to be satisfied because simply not doing what they were supposed to be doing isn’t likely to be a prosecutable regulatory offense but a company issue. And, if the activities were for the benefit of the Chinese market, then it is an excusable action.

For the director who was involved, this might be easier to find. The lower level employees are a little more difficult. Director has the power to help decide what is good for Citic, its clients and for the market. But the employees have no power to do the same, making them executors of the director’s decisions.

Riding a fine line to prove this will be important because without it, what the Communist Party will have on its hands is a way for investors to file suit on the government for encouraging the creation of a bubble, requiring it to compensate the investors for their losses.

If you’ve been following the news on the Chinese stock market, you may have heard that China has begun to sell US Treasuries. This is to pay back some of the investors on their losses. Currently, there seems to be some sort of strict criteria to cashing out and then getting compensated, but with this case, the CCP will be faced with a choice of intervening in the market on the side of the investors/citizens or taking down large sections of the securities trading operators.


You probably do not have access to the Shanghai Stock Exchange, but have you bought into Chinese funds?


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. 

Applying Lessons from Headline-Making Enforcement Actions to Solidify Your Risk Management Strategy

On Monday, January 26, Associations of Certified Anti-Money Laundering Specialists (hereon ACAMS) held its Third Annual AML Risk Management Conference at The Conrad Hotel in downtown New York. Over the course of this week, summaries and takeaways from the key notes and panel discussions will be shared in this blog.

  • Kieran Beer, CAMS, Editor-In-Chief at ACAMS at Moneylaundering.com
  • Arthur Middlemiss, Esq., CAMS, Partner, Lewis Baach Pllc
  • Jonathan Lopez, Partner, Orrick Herrington and Sutcliffe LLP
  • David Szuchman, Executive Assistant Attorney and Chief of Investigation Division, New York County District Attorney’s Office

HeaderThis panel consisted of three present or former prosecutors. Discussion topics ranged from prevention to remediation for both firms and individuals. These topics were discussed under the context of headline grabbing media reports about large banks. Here are ten takeaways:

  1. Three things for firms and individuals to do to show wrongdoing was not criminal: SELF IDENTIFY wrongdoing, SELF REPORT to regulators, and SELF REMEDIATE wrongdoing with either corrections or plan to correct. – Arthur Middlemiss
  2. Firms and individuals must keep up with the news to avoid common inadequacies that are found; it is expected for them.
  3. Risk Assessment programs are a firm’s first and best line of defense against criminal action.
  4. Criminal action against a firm used to be the said firm’s death sentence, but prosecutors have gone out of their way to make sure it isn’t by timing information flow and the market so that the criminal firm’s shareholders do not take a direct hit while firm’s cash takes a direct hit with penalties.
  5. Willful ignorance is the worst defense for an individual both just as a professional and as a defense for wrongdoing. Willful ignorance is part of the crime.
  6. Compliance Officers are asked to bear more professional risk. With it are higher compensation and higher professional risk. Try to avoid the risk from the very beginning, including negotiating during job interviews/offers.
  7. In negotiating a Deferred Prosecution Agreements, don’t over-promise because DPA’s are conditional.
  8. Compliance programs are an affirmative defense. Need to have them, need them to be implemented, and need documentation showing effort to get the rest of the firm involved.
  9. Some offenses lead to investigation and review into other issues. Such are AML-related offenses, which could trigger a review of the bank charter.
  10. Keep in mind that it is difficult to keep a firm out of compliance at the civil level, but there’s no excuse for not figuring out what it takes to keep the firm out of crimes.

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 tweets @MoneyCompliance