RBC Capital Markets, LLC
The findings stated that the firm introduced three new transaction monitoring rules that were intended to identify red flags of suspicious money movements. However, the firm configured the parameters and thresholds of these monitoring rules in a manner that did not capture many of the types of transactions the rules were intended to detect. As a result, the monitoring rules either failed to generate useful alerts or otherwise did not identify red flags of suspicious money movements that the firm should have investigated. In practice, the firm failed to effectively review the monitoring rules to determine whether the rules were identifying suspicious money movements in customer accounts so as to enable the firm to investigate and report the suspicious transactions.
In addition, the firm delegated to two different groups responsibilities for assessing the effectiveness of the transaction monitoring rules and for decommissioning ineffective rules, but the firm did not have procedures for the two groups to coordinate or escalate concerns. Consequently, the three rules that failed to generate useful alerts remained in place for years and the firm failed to identify, investigate, and report suspicious transactions that these rules were designed to detect. The firm ultimately updated its procedures to require periodic assessments of its automated transaction monitoring rules to determine whether they are effectively enabling the firm to detect and cause the reporting of suspicious transactions.
