This week, FINRA announced two recent disciplinary actions against firms related to anti-money laundering (AML) rule violations. These cases are remarkable for a few things: the scope of the alleged failures, and the size of the sanctions.
According to the press release, FINRA fined Pension Financial Services, a clearing firm, $450,000. The allegations were based on alleged failures to "establish and implement an adequate [AML] program to detect and trigger reporting of suspicious transactions," as required by the BSA and FINRA rules. FINRA also fined Pinnacle Capital Markets $300,000 for the same basic violations.
The press release notes that the issues uncovered at Penson occurred from October 2003 to May 2008. From the wording of the release, it may be that the deficiencies were caused by the firm's failure to devote sufficient resources to the AML compliance program. The issues with Pinnacle, occurred from January 2006 t September 2009, involved the firm failing to have procedures to verify the identities of foreign sub-account holders.
AML has been a regulatory hot-topic since the rules were established. Firms should by now recognize that this will continue to be a focus of regulatory scrutiny, and that it is in their best interests to evaluate and modify as needed, its AML program to ensure compliance with the rules. The stakes for failing to do so are increasing.
