A broker-dealer and its former Chief Compliance Officer ("CCO") settled FINRA charges for failing to reasonably establish and maintain an AML program designed to achieve compliance with the Bank Secrecy Act ("BSA").
In a Letter of Acceptance, Waiver and Consent, FINRA stated that the broker-dealer's supervisory procedures were not tailored to the heightened AML risks presented by the broker-dealer's customer base, including companies whose beneficial owners are residents of Venezuela. FINRA said that while the broker-dealer had procedures for identifying certain AML red flags, the firm did not specify how it would monitor for, detect, and investigate those red flags. FINRA also commented that the broker-dealer had approved third-party wire transfers that should have been the subject of suspicious activity reports.
FINRA found that the broker-dealer failed to conduct periodic reviews of accounts for certain foreign financial institutions, as required under BSA Rule 1010.610 ("Due diligence programs for correspondent accounts for foreign financial institutions"). Additionally, FINRA determined that the broker-dealer did not provide reasonable AML training to its personnel. As a result of the aforementioned failures, FINRA decided that the broker-dealer violated FINRA Rule 3310 ("Anti-Money Laundering Compliance Program").
FINRA also cited a variety of other violations, including a violation of FINRA Rule 3110 ("Supervision"), and failure to protect customer records as required by Regulation S-P Rule 30 ("Procedures to safeguard customer records and information; disposal of consumer report information").
To settle the charges, the broker-dealer agreed to a (i) censure and (ii) $55,000 fine. In addition, the firm's former CCO agreed to a six-month suspension from associating in any capacity with a FINRA member.
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