Firm Settles FINRA Charges for AML Violations in Sales of Penny Stocks

A broker-dealer settled FINRA charges for failure to implement an adequate AML program for transactions involving low-priced securities and foreign financial institutions ("FFIs").

According to the Letter of Acceptance, Waiver and Consent ("AWC"), from January 2014 to April 2018, the firm failed to (i) tailor its AML program to account for regulatory risks associated with sales of low-priced securities, (ii) respond to red flags for potential market manipulation, (iii) implement reasonable policies for performing due diligence of correspondent accounts of FFIs, and (iv) conduct reasonable independent testing of its AML program.

As a result of the above conduct, FINRA determined that the firm violated FINRA Rules 3310 ("Anti-Money Laundering Compliance Program") and 2010 ("Standards of Commercial Honor and Principles of Trade").

To settle the charges, the individual agreed to (i) a censure, (ii) a $450,000 fine, and (iii) within 60 days of Notice of Acceptance of this AWC, provide a certification of compliance with the issues identified in the AWC.