Broker-Dealer Settles Charges for AML Compliance Violations

A broker-dealer settled FINRA charges for (i) failing to develop and implement an adequate AML compliance program, and (ii) failing to "reasonably detect, investigate, and respond to potentially suspicious transactions by a corporate customer."

In a Letter of Acceptance, Waiver, and Consent, FINRA found the broker-dealer's AML supervisory program was not adequately designed to detect and report suspicious trading activity. FINRA found that the broker-dealer did not monitor for (i) sustained customer trading activity representing a significant proportion of the daily trading volume in a low volume security or (ii) customer trading activity that appeared to have no discernible purpose or that appeared to lack business sense. FINRA concluded that the broker-dealer (i) "failed to develop and implement an AML compliance program reasonably designed to detect and report suspicious trading activity" and (ii) failed to "reasonably detect, investigate, and respond to potentially suspicious transactions by a corporate customer."

As a result, FINRA determined that the broker-dealer violated FINRA Rule 2010 ("Standards of Commercial Honor and Principles of Trade") and Rule 3310(a) ("Anti-Money Laundering Compliance Program"). To settle the charges, the broker-dealer agreed to (i) a censure, (ii) a $50,000 civil monetary penalty and (iii) undertakings to improve its AML compliance and supervisory programs.