Firm Charged with Failure to Conduct Independent AML Audit

A small firm settled FINRA charges for failing to conduct annual independent testing of its anti-money laundering program.

In a Letter of Acceptance, Waiver, and Consent, FINRA found that from 2016 through 2019 the firm failed to conduct annual independent testing of the firm’s AML compliance program as required for those acting as placement agents for private placements. As a result, FINRA found that the firm violated FINRA Rules 3310(c) ("Anti-Money Laundering Compliance Program") and 2010 ("Standards of Commercial Honor and Principles of Trade").

Separately, FINRA found that an individual at the firm engaged in activities as an investment banking representative without registering as one, as required. As a result, FINRA found that the individual violated FINRA Rules 1210 ("Registration Requirements") and Rule 2010.

To settle the charges, the firm agreed to a $5,000 fine and the individual agreed to (i) a $5,000 fine and (ii) a two-month suspension from associating with any FINRA member in all capacities.