InfoBytes Blog
FINRA fines firm for failing to follow its own AML policies
On July 27, the Financial Industry Regulatory Authority (FINRA) entered into a Letter of Acceptance, Waiver and Consent (AWC), fining a California-based securities firm $50,000 for allegedly failing to implement and follow its own anti-money laundering (AML) compliance procedures. As a result, the firm allegedly failed to detect red flags concerning potentially suspicious activity and failed to investigate or report the activity in a timely manner. According to FINRA, a sales practice examination detected instances between November 2012 and December 2016 in which the firm failed to detect red flags in four related accounts, including suspicious activity related to: (i) the “ownership of multiple accounts without an apparent business purpose for multiple accounts”; (ii) an account owner with a “significant disciplinary history related to securities fraud”; (iii) possible manipulative trading activity; (iv) unusual, unexpected transfer activity between related accounts without an apparent business purpose; and (v) unexplained third-party wire transfers, inconsistent with expected account activity. FINRA stated that although the “firm’s AML procedures indicated that when the firm detected any red flags of potentially suspicious activity, it would determine whether and how to investigate further,” the firm failed to implement these measures. The firm neither admitted nor denied the findings set forth in the AWC agreement but agreed to pay the fine and address identified deficiencies in its programs to ensure compliance with its AML obligations.