Broker-Dealer and CCO Settle Charges for AML Compliance Failures

A broker-dealer settled FINRA charges for failing to take reasonable steps to tailor its AML program to identify suspicious activities on low-priced securities. In addition, the firm's CCO settled simultaneous charges for related compliance supervisory failures.

In a Letter of Acceptance, Waiver and Consent, FINRA found that the broker-dealer's supervisory controls were ill-equipped to identify suspicious activity as to low-priced securities. FINRA said that the broker-dealer's supervisory policies did not provide guidance to third parties that manually reviewed transactions to help identify possible threats. FINRA also found that the CCO failed to conduct sufficient due diligence into the relevant low-priced securities.

FINRA determined that the broker-dealer and CCO violated FINRA Rule 2010 ("Standards of Commercial Honor and Principles of Trade"), FINRA Rule 3110(a)-(b) ("Supervision") and FINRA Rule 3310(a) ("Anti-Money Laundering Compliance Program"). To settle the charges, the broker-dealer agreed to (i) a censure and (ii) a civil monetary penalty of $100,000. The CCO agreed to (i) a nine-month suspension, (ii) a civil monetary penalty of $25,000 and (iii) a requirement to requalify as a general securities principal.