Federal prosecutors recently announced the settlement of a civil claim against a former money transfer company executive, which related to acts allegedly performed by the defendant in his executive capacity. U.S. Treas. Dept. v. Haider, No. 1:14-cv-09987, complaint (S.D.N.Y., Dec. 18, 2014), transferred to No. 0:15-cv-01518 (D. Minn., Mar. 17, 2015). For certain “white collar” offenses, prosecutors and regulators may bring a civil lawsuit to recover penalties and damages, rather than a criminal case. One reason is that the burden of proof is usually lower in civil cases. Instead of proving guilt beyond a reasonable doubt, the state must prove liability by either a preponderance of evidence or clear and convincing evidence. The government filed suit against the defendant for alleged violations of the Currency and Foreign Transactions Reporting Act, more commonly known as the Bank Secrecy Act (BSA) of 1970.
The BSA requires financial institutions in the U.S. to take certain actions to assist government investigations of alleged financial crimes, such as money laundering, as well as “intelligence or counterintelligence activities” intended “to protect against international terrorism.” 31 U.S.C. § 5311. For example, financial institutions must establish anti-money laundering programs (AMLs) according to guidelines established by the government. 31 U.S.C. § 5318(h), 31 C.F.R. § 1020.210. They are also required to keep records of various transactions and to report “suspicious” transactions in a “suspicious activity report” (SAR). 31 U.S.C. § 5318(g), 31 C.F.R. § 1020.320.
The Financial Crimes Enforcement Network (FinCEN), part of the U.S. Department of the Treasury, is responsible for investigating and prosecuting alleged BSA violations. Civil liability for violations may extend not only to the financial institution itself but also to “a partner, director, officer, or employee.” 31 U.S.C. § 5321. Criminal penalties may apply to any “person,” defined by federal law to include both individuals and business entities. Id. at § 5322, 1 U.S.C. § 1.