Ex-SEC Registered Broker Fined by FINRA for AML Failures
A former US Securities and Exchange Commission-registered broker has agreed to pay $250,000 for failing to implement a “reasonable” anti-money laundering (AML) policy, among other things.
Spencer Edwards Inc (SEI) was required by AML procedures to monitor customer account activity for unusual transactions taking place, in particular looking at size, pattern, type and related risk factors. During the relevant time, there were numerous red flags, however FINRA alleges that no person at SEI followed the required procedures and it therefore failed to properly assess suspicious activity. Instead, the task had been delegated to an unsupervised outside counsel. On occasions where suspicious activity was reported, it was not followed up within SEI.
The firm’s lack of suitable controls meant that it failed to identify or investigate activity by customers in companies with no business, that were routinely liquidated within days of deposits being made.