FINRA Charges and Fines Clearing Firm for AML, SHO and Capital Violations

FINRA settled charges and fined a clearing firm for numerous failures to comply with anti-money laundering ("AML"), financial reporting, and supervisory obligations.

FINRA found that the firm's AML surveillance program did not "reasonably address the risks of its business model." FINRA noted that accounts which COR dealt with presented a higher risk of money laundering and other fraudulent activity. The surveillance program, according to FINRA, failed to identify and address "red flags" related to its corresponding firms and transactions by customers. Specifically, FINRA noted that, for several months during 2012, the firm's AML surveillance system suffered a "near-complete" collapse, which led to a failure to conduct any systemic reviews or investigate suspicious activity. FINRA found that the firm would file suspicious activity reports without first completing the investigation necessary to support the filing.

Additionally, FINRA found that the clearing firm made numerous financial errors over the four-year period, which included filing erroneous customer reserve and net capital computations, and filing inaccurate FOCUS reports with FINRA. COR also did not have adequate supervisory systems relating to Reg. SHO in place, back-office functions and the monitoring of the firm's funding and liquidity.

See: FINRA Order; FINRA Press Release.