CCO Suspended and Firm Fined $475,000 for AML Violations
The CCO/AML Officer of a broker-dealer was suspended from the industry, and his firm was fined $475,000, for failing to implement an adequate anti-money laundering program. FINRA criticizes the firm for having inadequate AML procedures where were “generic” procedures purchased from a third party vendor and “issued without modification.” FINRA charges the firm with failing to conduct required annual reviews, following its own customer identification procedures, following up on suspicious money movements, and detecting suspicious activities. Although the CCO no longer works for a FINRA firm and left the broker-dealer in 2010, FINRA asserts that it retains jurisdiction over him pursuant to FINRA by-laws.
OUR TAKE: You cannot just go through the compliance motions. Just because you have a compliance officer and procedures doesn’t mean you have a compliance program. You actually need to implement the procedures through a tailored drafting process and ongoing monitoring and reporting. This takes time and resources. Also, investment management and broker-dealer personnel should understand that leaving an employer (or the industry) does not get you out of prosecution for events that occurred under you watch.