Firm Settles FINRA Charges for Failing to Test Its AML Program

A market-making firm settled FINRA charges for failing to conduct independent testing of its anti-money laundering program for two years and performing unreasonable testing for another two years.

According to the AWC, FINRA found the firm failed to conduct any independent testing of its anti-money laundering program during the relevant period. In addition, FINRA determined that when the firm did conduct independent testing during the following two years, they evaluated the program as it had existed roughly three years earlier. FINRA noted that these delayed tests failed to account for intervening operational changes, such as the growth of the company's fixed-income business and modifications to its trading supervision processes, rendering the tests inadequate to assess the program's actual operation at the time they were conducted.

FINRA found the firm violated FINRA Rule 3310(c) ("AML Compliance Program Testing") which requires member firms to provide for annual, calendar-year independent testing for compliance with their anti-money laundering programs.

To resolve the matter, the firm consented to a censure and a $15,000 fine.