While most CARF penalties are administrative, willful non-compliance can result in criminal prosecution. Understanding this risk is critical for executives and compliance officers.
Criminal vs Civil
Civil/Administrative
Monetary fines, operating restrictions - the norm for compliance failures.
Criminal
Prosecution, potential imprisonment - reserved for willful violations.
Criminal prosecution can result in imprisonment, substantial fines, and permanent reputational damage for individuals and organizations.
Triggering Factors
Criminal liability typically requires:
- Willful intent to evade
- Deliberate falsification
- Systematic evasion schemes
- Obstruction of authorities
Criminal liability generally requires proof of willful intent. Negligent or accidental non-compliance typically results only in civil penalties.
Personal Liability
Individuals at risk:
- Directors and officers
- Compliance officers
- Those with knowledge and authority
Defense Strategies
- Documented compliance efforts
- Good faith reliance on professional advice
- Lack of willful intent evidence
- Prompt remediation
Risk Management
- Clear compliance responsibilities
- Adequate resources and authority
- Documentation of decisions
- Legal counsel involvement
Conclusion
Criminal liability is rare but serious. Good faith compliance efforts are the best protection against criminal exposure.
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