Broker, Compliance Officer Fined For AML Failures

Money laundering continues to be a key focus of regulators. Recently, for example, FINCEN Director Jennifer Shasky Calvery discussed money laundering through real estate transactions. Earlier this year the SEC brought an action against a broker-dealer based on money laundering compliance. In the Matter of E.S. Financial Services, Inc., Adm. Proc. File No. 3-17099 (February 4, 2016).

This week FINRA fined Raymond James $17 million for systematic anti-money laundering failures. The AML compliance officer, Linda Busby, was fined $25,000 and suspended for three months.

Over an eight year period beginning in 2006 the firm grew rapidly. During that period the growth of the AML compliance systems and processes failed to keep up with that of the firm. As a result Raymond James and Ms. Busby were unable to establish tailored AML programs to fit each of the firm’s businesses. Rather, the firm relied on a patch work system.

The failure to expand the firm’s AML systems in a manner that was consistent with firm growth meant that certain “red flags” of potentially suspicious activity went undetected. Even when detected, those incidents were at times inadequately investigated. During the investigation the regulator also found that the firm failed to conduct the required due diligence and periodic risk reviews for foreign financial institutions. In addition, Raymond James failed to establish and maintain an adequate customer identification program. Ms. Busby failed to ensure that Raymond James’ reviews were conducted.

This is not the first time the firm has been sanctioned for AML failures. In 2012 Raymond James was fined for having inadequate AML procedures. The resolution of that matter called for the firm to certify that it had adopted reasonably designed systems and procedures to achieve compliance.

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