Sanctuary Securities, Inc.

Sanctuary Securities was fined $150,000 for failing to develop and implement an AML program reasonably designed to detect and cause the reporting of suspicious transactions.

The firm received various types of exception reports from its clearing firm but lacked reasonable written guidance concerning how to review them. As a result of lacking reasonable written guidance, the firm cleared many transactions identified by the reports without a reasonably documented evaluation of whether they raised red flags of suspicious activity.

In addition, the firm did not establish and implement appropriate risk-based procedures for conducting ongoing customer due diligence, including understanding the nature and purpose of customer relationships in order to develop a customer risk profile.

Furthermore, the firm failed to establish and implement a reasonably designed CIP. The firm’s WSPs required the firm to collect certain essential facts about its customers at account opening including name, date of birth, and address. However, the WSPs did not require the firm to collect an identification number from new customers, did not provide reasonable procedures for the verification of the identities of its customers, and did not address how the firm would respond to circumstances where it could not form a reasonable belief that it knew the true identity of a customer.

The findings also stated, while the firm retained an outside consultant to conduct an independent test of its AML program, that test failed to address material aspects of the firm’s AML program.