The Financial Industry Regulatory Authority is fining Raymond James Financial Inc. https://www.securities-fraud-attorneys.com(RJFS) and Raymond James & Associates (RJA) $17M. The self-regulatory organization is accusing the company of widespread failures related to anti-money laundering compliance.
According to FINRA, from ’06 to ‘14 the processes that the firm had in place to stop money laundering failed to line up with its business growth. The SRO said that the company instead depended on “patchwork” systems and procedures to identify suspect activity. Because of this, Raymond James was unable to notice certain “red flags” that arose.
FINRA also said that both firms did not perform the mandated due diligence and risks reviews for foreign institutions. RJFS is accused of not putting into place and maintaining a Customer Identification Program that was adequate.
It was just in 2012 that Raymond James Financial Services was subject to sanctions for its inadequate procedures related to anti-money laundering. The firm said that it would evaluate its AML procedures and programs.
Also sanctioned and fined is former Raymond James Anti-Money Laundering Compliance Officer Linda Busby. She is suspended for three months and must pay a $250K fine. FINRA said that along with the two firms, she did not succeed in setting up AML programs geared toward the two companies, respectively.
By settling, Raymond James Financial Services, Raymond James & Associates, and Busby are not denying or admitting to the FINRA charges.
It is important that financial firms have systems in place to identify suspect transactions that may be signs of money laundering.
In an effort to up the ante in combatting and preventing money laundering, the U.S. Treasury Department has unveiled its Customer Due Diligence Rule that mandates that all financial institutions gather and verify the personal information of people that own, control, and make money from companies that set up accounts. Beneficial owners of companies setting up accounts have to be identified and verified via a standard certification form or through some other way. Anti-money laundering program requirements have also been modified so that they now include risk-based procedures for performing ongoing due diligence so that suspect activity can be identified and reported. The final rule will go into effect in July.
In other anti-money laundering news, a U.S. federal grand jury has indicted a UK man for not following anti-money laundering requirements while running Global Transaction Services, a money transmitting business in Atlanta, Georgia. Global Transaction Services was responsible for processing hundreds of millions of dollars worth of financial transactions for entities based in different parts of the world. According to prosecutors, Daniel Barrs was aware that a lot of his customers wouldn’t have been able to gain access to U.S. banking without help and that they were transmitting or getting wires from nations that are considered money laundering risks.
Under the Bank Secrecy Act, money transmitters have to protect against money laundering and other illegal conduct by putting into place and maintaining a program to combat such activities in an effective way. Barrs is accused of taking action so that the money transmitting company would not have that kind of program in place, including hiring people who had no experience working with the Bank Secrecy Act to serve as compliance offers, not giving employees the proper training so that they could comply with the Act, and disregarding warnings that the company’s compliance program was inadequate.
The SSEK Partners Group is a securities fraud law firm.
FINRA fines Raymond James record $17M for compliance failures, OnWallStreet, May 18, 2016
Treasury Announces Key Regulations and Legislation to Counter Money Laundering and Corruption, Combat Tax Evasion, US Treasury Department, May 5, 2016
Global Transaction Services head indicted for money laundering, May 13, 2016