Broker-dealer fined for AML compliance, supervision and record keeping failures

A broker-dealer has paid FINRA fees for AML program compliance, supervision, and communication record-keeping failures.

In an Acceptance, Waiver, and Consent Letter, FINRA determined that the broker had failed to (i) establish a reasonably designed AML program, (ii) implement its Client Identification Program (“CIP “), (iii) reasonably supervised manipulative commerce and (iv) maintaining business-related electronic communications. FINRA found that the broker only performed manual reviews of the daily transaction log to identify suspicious transactions, and that its review policies were limited to large-scale transactions – even though small transactions made up the bulk of the transactions. company activities. FINRA found that the broker failed to investigate instances where clients placed buy and sell orders for the same security at the same time for the same limit price. In addition, FINRA found that the broker failed to adequately investigate the issue – even after the potential misconduct was brought to its attention by FINRA and its routing broker on several occasions. instead relying on unverified promises from the customers in question that they would cease unreasonable activity.

FINRA also found that the broker failed to retain certain instant messages and email communications sent by Registered Representatives and failed to document messages sent via the WeChat instant messaging service, as well as correspondence sent via personal emails from representatives regarding securities-related matters. . FINRA said the broker was aware these communications were ongoing but took no steps to preserve the conversations.

As a result, FINRA determined that the broker violated FINRA Rule 2010 (“Standards of Commercial Honor and Principles of Trade”), Rule 3110 (“Supervision”), Rule 3310(a)-(b) (“Anti-Money Money Laundering Compliance Program”) and Rule 4511 (“General Requirements”). FINRA also determined that the broker-dealer violated SEA Section 17(a) (“Records and Reports”) and SEA Rule 17a-4(b)(4) (“Records to be Kept by Certain Members of the stock exchange, brokers and resellers”). .

To settle the charges, the broker-dealer agreed to (i) a censure, (ii) a civil fine of $450,000, and (iii) a ban on providing market access for two years and a suspension from related activities until to undergo improvements to its control systems.

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