Tigress Financial Partners, LLC
Tigress Financial Partners was fined $100,000 for lacking an AML program reasonably designed to detect and report suspicious transactions. The firm onboarded hundreds of new customers domiciled in high-risk foreign jurisdictions. The firm’s AML program, included in its WSPs, provided that the firm would monitor for suspicious activity using available exception reports or review of a sufficient amount of account activity to permit identification of patterns of unusual activity and the presence of red flags. However, the WSPs did not include reasonable guidance regarding what available exception reports or account activity should be reviewed, how patterns of unusual activity were to be detected, or how to investigate and document investigations of unusual activity or red flags.
The firm relied on a periodic manual review of hard copy blotters to detect and review for red flags. This manual process required line-by-line evaluation without the use of sorting, risk ranking, automation, or any other tools to identify trends or potentially suspicious activity or patterns of activity. This practice was unreasonable given the firm’s customer base and the volume and types of securities transactions and money movements in firm accounts.
In addition, the firm’s AML compliance program did not include appropriate risk-based procedures for conducting ongoing customer due diligence. The firm’s WSPs did not reasonably identify what risk factors would subject a customer to additional due diligence, how the firm would determine which accounts would be subject to additional due diligence, when the additional due diligence would be performed, and what additional due diligence would consist of. Only the few firm customers identified as politically exposed persons were designated as high risk or subjected to additional due diligence.
Moreover, the firm did not understand the nature and purpose of the customer relationship of certain high-risk customers. As a result, the firm did not reasonably develop a customer risk profile for certain customers who utilized shell or private investment companies; were under investigation by the FBI; or were domiciled in, doing business in, or regularly transacting with counterparties in jurisdictions known as bank secrecy havens, tax shelters, or high-risk geographic locations.
The firm’s annual independent AML testing for each year identified deficiencies in the firm’s procedures for conducting ongoing customer due diligence.
The findings also stated that the firm did not disclose mark-ups and markdowns on customer confirmations or reasonably supervise for compliance with its customer confirmation obligations. The firm’s representatives did not manually enter prevailing market price information when executing corporate debt transactions on external platforms as required, despite the firm’s clearing firm providing notice and training to the firm regarding a manual entry requirement. This issue persisted until the firm was notified of these deficiencies by FINRA.
