July 19, 2021 – An AWC was issued in which the firm was censured, fined $350,000 and required to retain an independent consultant to conduct a comprehensive review of the reasonableness of the firm’s policies, systems, procedures (written and otherwise) and training relating to compliance with FINRA Rule 3310 and the requirements of the Bank Secrecy Act and the regulations promulgated thereunder related to monitoring for, identifying, investigating, documenting and responding to red flags of suspicious activity. Without admitting or denying the findings, the firm consented to the sanctions and to the entry of findings that it failed to develop and implement an AML program reasonably designed to achieve and monitor its compliance with the Bank Secrecy Act and the implementing regulations thereunder. The findings stated that the firm did not tailor its AML program to reasonably monitor for and report suspicious activity in light of its business model. The firm lacked reasonable written AML procedures for the surveillance of potentially suspicious transactions in customer accounts. The procedures did not identify any exception reports and did not describe how or how frequently supervisors should use them. The firm’s AML procedures also did not contain any procedures about documenting any analyses or records regarding the investigation of potentially suspicious activity and the firm did not document the findings of its investigations. In addition, the firm relied almost exclusively on a manual review of the daily trade blotter to identify certain types of suspicious trading, even though it did not reflect canceled order data or patterns of trading across accounts or across multiple days. The firm’s manual review was unreasonable given the volume and complexity of the trading by its customers. The firm also had a practice of failing to reasonably respond to certain types of red flags of suspicious activity. The firm’s practice was to not file a suspicious activity report even after it found that the customer was engaging in transactions that were not the sort in which the firm expected the customer to engage. As a result of the firm’s failure to implement a reasonably designed AML program, it failed to timely or reasonably detect, investigate or respond to potentially suspicious activities by retail customers. (FINRA Case #2020067467601)