Broker-Dealer Settles FINRA Charges for Failure to Follow AML Procedures

A broker-dealer settled FINRA charges for failing to follow firm written anti-money laundering procedures that required monitoring for red flags of potentially suspicious activity.

In a Letter of Acceptance, Waiver and Consent, FINRA stated that the broker-dealer failed to detect:

• the common ownership of several accounts without an apparent business purpose for multiple accounts;

• an account owner that had a substantial disciplinary history of securities fraud;

• unusual transfer activity between related accounts that was inconsistent with expected account activity; and

• unexplained third-party wire transfers.

FINRA determined that, in failing to detect, investigate and report the red flags, the broker-dealer violated FINRA Rules 3310(a) and 2010.

To settle the charges, the broker-dealer agreed to a (i) censure and (ii) $50,000 fine. The broker-dealer also agreed to establish, within 90 days, reasonably designed systems and procedures for compliance with the broker-dealer's anti-money laundering obligations.