FINRA Fines Firm for AML Compliance Failures

A firm settled FINRA charges for failing to respond to FinCEN requests for information and for other AML compliance violations.

According to the AWC, during a five-month period, the firm did not review or respond to any FinCEN requests to provide information, as required by the Bank Secrecy Act, 31 CFR Part 1010.520 ("Information sharing between government agencies and financial institutions"). FINRA found that the firm failed to remediate its process for handling such requests despite prior FinCEN warnings. FINRA said the firm failed "to provide any guidance on how to search firm records in response to FinCEN requests" and lacked any "process for monitoring or otherwise supervising whether the firm timely reviewed and responded."

FINRA also found that the firm failed to conduct "annual independent" AML testing. FINRA stated that though the firm's business model required annual testing, the firm’s written procedures only called for biennial reviews. FINRA had been previously warned that this testing must occur annually.

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

To settle the matter, the firm agreed to (i) a censure, (ii) pay a $20,000 fine, and (iii) an undertaking requiring certification by senior management that the firm has implemented a compliant AML program.