FINRA Fines On-Line Broker $1 Million for Insufficient AML Controls
FINRA has fined an on-line broker $1 Million for failing to implement adequate anti-money laundering procedures. FINRA faulted the broker for failing to use an automated electronic system “specifically designed to detect potentially manipulative trading activity in customer accounts.” According to FINRA, the firm relied on manual monitoring of suspicious activity. FINRA noted that firms must tailor their AML programs to their businesses and that an automated on-line broker would need an automated system to comply with applicable AML laws and regulations.
OUR TAKE: This is a hefty fine given that FINRA has not alleged any actual money laundering or customer harm. FINRA appears to be warning the entire on-line brokerage industry that it must implement appropriate controls especially in light of last year’s abuses by foreign persons who manipulated on-line accounts.