Insufficient AML Resources Result in Big Fines
FINRA levied fines of $450,000 and $300,000 against two BD firms for failing to implement adequate anti-money laundering procedures as a result of a failure to devote sufficient resources to AML compliance. One firm allocated 1-2 persons with AML responsibilities, which included reviewing phone-book sized suspicious activity reports. According to FINRA, inadequate staffing prevented review of higher risk transactions and transactions highlighted by an automated system. In the other case, the firm had not implemented an automated AML system, relying on inadequate manual reviews.
OUR TAKE: The “limited resources” defense will not hold water with regulators. They don’t care how big/small or profitable/unprofitable you are.