A broker-dealer settled FINRA charges for failing to conduct sufficient annual independent testing of its anti-money laundering ("AML") compliance program three times over the course of a five-year period.
In a Letter of Acceptance, Waiver and Consent, FINRA stated that the broker-dealer failed to conduct independent AML tests in 2016, 2017 and 2019. FINRA said the three AML tests were insufficient because (i) in 2016 the AML tests were conducted by a registered representative who was supervised by the firm's AML compliance officer, (ii) in 2017 the AML test was conducted with the firm's 2018 AML test, and (iii) in 2019 the AML test was conducted with the firm's 2020 AML test. As a result of the above failures, the broker-dealer violated FINRA Rules Rule 3310(c) ("Anti-Money Laundering Compliance Program") and 2010 ("Standards of Commercial Honor and Principles of Trade").
To settle the charges, the broker-dealer agreed to a $5,000 civil money penalty.
Commentary - Christian Larson
To be independent, AML testing should be conducted by an outside third party, or by persons in the firm who are not supervised by the compliance officer.
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