FINRA Sanctions Firm And Compliance Officer For AML Violations


This past February, FINRA issued an acceptance, waiver and consent (“AWC”) against a firm and its global anti-money laundering (“AML”) Compliance Officer (“CO”) for failures in AML compliance regarding brokerage and custodial DVP transactions in penny stocks and unregistered securities through omnibus bank-customer accounts in “known bank-secrecy havens, such as Switzerland, Guernsey and Jersey.”  FINRA censured the firm and fined it $8 million, and issued an individual one-month suspension and $25,000 fine to its AML CO.  The firm is exiting its equity brokerage business effective June 2014.  The AWC cited, among others:

  • Failure to monitor and update SARs;
  • Lack of due diligence on correspondent omnibus accounts for foreign financial-institution customers;
  • Failure to conduct adequate independent AML testing;
  • Failed to identify news reports about “pump and dump” stocks;
  • Failed to note whether securities were subject to prior regulatory requests.

The firm and its AML Compliance Officer was aware of inherent and heightened risks (including existing investigations, SEC trading suspensions) and failed to adequately modify its procedures, including implementing new alerts and activity reports without corresponding procedures on their use and follow up investigations.

In re Brown Brothers Harriman & Co., No. 2013035821401 (FINRA AWC).

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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