BD Fined $17 Million and Compliance Officer Fined and Suspended for AML Monitoring Weaknesses

 

A large broker-dealer was fined $17 Million and its AML Compliance Officer was fined and suspended for widespread failures in the firm’s anti-money laundering compliance program.  FINRA faults the firm for failing to devote adequate resources to AML compliance as the firm grew rapidly from 2002-2013.  According to FINRA, the respondent relied on a few employees to manually review millions of transactions.  Also, the AML Compliance Officer relied on an affiliate’s AML efforts without adequate testing and assurances of compliance.  FINRA also noted that the firm was cited and fined in 2012 for AML compliance breakdowns that it undertook, but failed, to correct.  FINRA charges failure to implement an adequate AML program and supervisory structure including reasonable policies and procedures.

OUR TAKE: Compliance is not a “set it and forget it” function.  As firms grow and change, they must add resources to ensure they continue to implement best practices.  We recommend that firms re-examine allocations at least annually and devote no less than 5% of revenue to compliance.