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 The Office of Personnel Management, a federal agency that governs
labor practices in the government, determined that the Treasury's
Financial Crimes Enforcement Network, known as FinCEN, illegally
screened candidates in a quest to hire only lawyers for certain
jobs, the officials said. It has recommended further investigations
by two other federal agencies into FinCEN's practices, they added.
Rules for hiring at government agencies make it illegal to screen
candidates for qualifications that aren't stipulated in the job
description, and the jobs FinCEN had posted weren't designated as
being only for lawyers, the officials said.
Some senior Treasury officials knew about FinCEN's practice but it
was not halted until OPM identified the problem, two of the sources
said. Treasury sent a memo to FinCEN suspending its hiring
authority, one of the sources said.
A Treasury spokeswoman, Hagar Chemali, said on Thursday that FinCEN
is "committed to complying with all relevant federal rules and
regulations regarding federal hiring."
On Friday, she said, "FinCEN does not have a hiring freeze. It is
continuing to recruit and hire."
Chemali declined to comment on the memo or provide further
explanation.
OPM did not return calls and emails seeking comment.
The hiring freeze at FinCEN and further investigations into its
practices could deal at least a short-term setback to its push to
aggressively crack down on money laundering.
ACAMS moneylaundering.com, a compliance trade publication,
previously reported that FinCEN was under scrutiny and that Treasury
officials were considering suspending its hiring authority. However,
the actual hiring freeze, the rescinded job offers, the
investigations, and why OPM intervened have not been previously
reported.
REMAKING AGENCY
The hires were being done as part of a drive by FinCEN's director,
Jennifer Shasky Calvery, to remake her agency, the formerly sleepy
steward of U.S. anti-money laundering laws, into a powerful
organization capable of standing up to big banks and other financial
firms where violations are discovered.
FinCEN has taken part in several of the highest-profile actions
against banks over the past three years, including a record $875
million settlement with HSBC Holdings Plc for helping Mexican drug
traffickers launder money in U.S. accounts. Earlier this year, the
agency also participated in an investigation into JPMorgan Chase &
Co. That probe resulted in the bank agreeing to $1.9 billion in
penalties and forfeitures for failing to alert regulators to
suspicions about convicted Ponzi schemer Bernard Madoff.
FinCEN can issue civil penalties but lacks prosecutorial power.
The positions at FinCEN where the illegal hiring took place were in
the agency's recently revamped enforcement division, according to
the officials. One of the officials said several of the people whose
job offers were revoked are currently prosecutors at the U.S.
Department of Justice, where Shasky served as the chief of the DOJ's
Asset Forfeiture and Money Laundering Section before moving to
FinCEN in September 2012.
It is unclear whether any of the people who had job offers revoked
suffered damage to their careers as a result.
At an ACAMS conference in March, Shasky talked about her hiring
strategy.
"We needed people that understood, 'How do you do enforcement? How
do you issue a summons? How do you do a deposition? How do you
negotiate a settlement? How do you draft the charging documents?'
Just kind of the nuts and bolts of doing enforcement," she said.
FinCEN ranked 296 of 300 in the 2013 list of the best places to work
in the federal government, according to the non-profit Partnership
for Public Service, based on data collected by OPM in an employee
survey. The agency scored low on categories such as effective
leadership, teamwork and employee skills-mission match. In 2012,
FinCEN was ranked 147 out of 292.
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INFLEXIBLE SYSTEM
Federal employment experts said the incident highlights the
antiquated system that dictates hiring procedures inside the federal
government, making the task of recruiting new government employees
far more complicated and cumbersome than it is in the private
sector.
Debra D'Agostino, a founding partner of the Federal Practice Group,
which specializes in labor laws for government employees, said
hiring managers at government agencies frequently have more specific
requirements in mind than they are permitted to display in some job
postings. Most find a way around the problem without leaving a paper
trail, she said.
"It happens all the time," D'Agostino said. "In this case it looks
like they just took the extraordinary step of tinkering with things
when there was no reason to do that and now they have to suffer the
consequences."
Linda Rix, who is co-chief executive of the consulting firm Avue and
who worked early in her career in OPM's audits department, said the
rules need to be revamped.
"They're a bunch of Byzantine rules that the government has that a
normal layperson looking at this says, 'I can see why they would
want someone with this skill,' but that is contrary to how the
government operates," she said.
A recent memo from the Obama Administration concerning the 2015
budget called for a congressionally chartered commission to examine
the federal personnel system and recommend reform.
'COMPLEX LITIGATION EXPERIENCE'
The FinCEN ads for the jobs in question didn't say explicitly that
only lawyers could apply.
But the people at FinCEN in charge of hiring devised a system to
weed out candidates who weren't lawyers by asking whether they had
"complex litigation experience," something only a lawyer could claim
to have, according to one of the sources.
It could not be determined why FinCEN could not get permission to
classify the jobs as open only to lawyers.
OPM discovered the practice during a routine audit. As a result, the
job offers for the 11 lawyers were rescinded earlier this year, the
officials said.
OPM also recommended that Treasury refer the incident to the
department's Inspector General and to the Office of Special Counsel,
an independent agency tasked with protecting whistleblowers and
disciplining government employees for labor misconduct, for
investigation, they said.
A spokesman for the Office of the Special Counsel declined to
comment for this story.
"We can neither confirm nor deny the existence of investigations,"
said Richard Delmar, a spokesman for the Treasury's inspector
general.
(Reporting By Emily Flitter in New York and Brett Wolf in St Louis;
Additional reporting by Mark Hosenball in Washington; Edited by
Martin Howell)
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