The findings stated that the firm used an AML surveillance system that failed to include any alerts for structuring or money movements other than outgoing wire transfers, even though the firm’s money-movement volumes created risk for potential structuring or layering. After FINRA alerted the firm to the issue, it activated additional surveillance alerts to address the deficiencies.
In addition, the firm’s AML policies, procedures, and review practices resulted in unreasonable reviews of the AML alerts generated by the firm’s surveillance system. The firm’s policies and procedures required prompt reviews of AML alerts, but numerous alerts did not receive timely reviews and were left open for over a month. Further, once selected for review, the majority of the AML alerts were closed in a matter of seconds, without any apparent inquiry. The firm had notice of issues with its AML reviews.
The firm’s independent AML testing identified concerns in multiple reports regarding insufficient and untimely AML reviews. Nevertheless, the firm failed to address the deficiencies identified in the AML testing. The failure to reasonably review AML alerts resulted in multiple potentially suspicious money movements involving a firm customer—who transferred funds from a firm business account to a firm trust account, and then to a foreign currency exchange—receiving no apparent reviews after the transactions occurred to confirm the activity had a lawful business purpose.
The firm ultimately revised its AML policies and procedures and provided updated guidance and training to firm personnel regarding the detection and reporting of suspicious transactions.
