Dual Registrant Settles SEC Charges for AML Program and SAR Reporting Failures

A dually-registered broker-dealer and investment adviser settled SEC charges for AML program failures and resulting Suspicious Activity Report ("SAR") filing failures.

According to the Order, between April 2017 and October 2021 the firm failed to timely file certain SARs as required by the Bank Secrecy Act ("BSA"). The SEC stated that in January 2019, the firm implemented a new internal AML transaction monitoring system, but found that - due to "deficient implementation and failure to test and conduct sufficient monitoring" - the firm failed to detect transactions involving wire transfers between customer accounts and foreign countries considered at high or moderate risk for money laundering. As a result, the SEC found that the firm failed to timely file at least 25 SARs in connection with transfers that ranged in value from $29,980 to $2.5 million.

In addition, the SEC stated that from April 2017 to October 2021, the firm failed to timely file at least nine SARs (in connection with transfers ranging in value from $10,480 to $6.2 million) because of inadequate processing of wire transfer data to the firm's AML transaction monitoring system.

The SEC found that the firm violated SEA Section 17(a) ("Records and Reports") and SEA Rule 17a-8 ("Financial Recordkeeping and Reporting of Currency and Foreign Transactions"). These provisions require broker-dealers to comply with reporting and recordkeeping requirements under the BSA to include the filing of SARs.

To settle the charges, the firm agreed to (i) a $7 million civil money penalty, (ii) a censure, and (iii) cease and desist from violating the statutory and regulatory provisions. In determining the settlement, the SEC considered the remedial action taken by the firm and its cooperation during the proceedings.