Consequences of Non-Compliance

By November 28, 2017FINRA

Today we want to highlight another example of what can happen for failing to abide by AML regulations and FINRA compliance standards. We share this as a cautionary tale of what we want to help our clients avoid by having a solid compliance plan in place. Read on:

A former Merrill Lynch broker who managed as much as $1 billion has been suspended and fined by Wall Street’s watchdog, in part for violating anti-money laundering rules by not telling the firm about potentially suspicious funds transfers involving clients’ accounts, according to a settlement.

The broker, who left Bank of America’s Merrill Lynch unit voluntarily in 2011, agreed to an 18-month suspension from the U.S. securities industry and a $60,000 fine, according to a Financial Industry Regulatory Authority settlement posted on the regulator’s website.

FINRA rules require brokerages to have policies and procedures in place to comply with a federal law aimed at detecting and curbing money laundering.

Financial services companies have been beefing up their anti-money laundering programs in recent years to meet regulators’ expectations. Firms are concerned about the potential for crushing fines, such as the record $1.9 billion fine this year against banking group HSBC to resolve charges that it allowed drug cartels to move vast sums of money from the bank in Mexico. Regulators expect to see “cutting edge” programs from the largest brokerages and banks.

The broker in this instance was a 17-year veteran of Merrill Lynch, managed 300 accounts with assets totaling between about $500 million to $1 billion, according to FINRA. His customers included prominent business people, doctors and other professionals, FINRA said.

FINRA uncovered roughly 95 “suspicious transfers of money” totaling about $8 million among the broker’s clients’ accounts and to third parties. The transfers “should have raised red flags” as potentially suspicious activity that the broker should have reported to Merrill, FINRA said.

Whether your firm is a large national company or local office, it is imperative that you have your compliance house in order. The professionals at Cobia Compliance stand ready to help you have a plan in place to avoid these pitfalls. Contact us today for a consultation!


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