The Financial Industry Regulatory Authority (FINRA) recently took formal disciplinary action against a New York-based broker-dealer that is affiliated with a Mexican broker-dealer and a Mexican bank for inadequate anti-money laundering (AML) systems and procedures. FINRA also found that the firm failed to register 200 to 400 foreign finders who functioned as the firm’s primary points of contact with its Mexican clientele. FINRA also named the firm’s former AML officer and Chief Compliance Officer (CCO) for these violations.
FINRA rules require all member firms to develop and implement a written AML program reasonably designed to achieve and monitor the members' compliance with the requirements of the Bank Secrecy Act (BSA) and implementing its regulations. In its January 28 settlement order, FINRA found that, between 2008 and 2013, the firm failed to develop such a program. Specifically, the firm failed to: (a) adopt AML procedures adequately tailored to its business; (b) fully enforce its AML program as written; and (c) investigate certain suspicious activities. FINRA specifically took issue with the firm’s reliance on off-the-shelf procedures not customized to identify the risks unique to opening accounts, transferring funds and effecting securities transactions for customers located in Mexico, a high-risk jurisdiction for money laundering, or the risks arising from the firm’s reliance on foreign finders.
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