The Financial Industry Regulatory Authority (FINRA) said last week that it has fined U.S. Bancorp Investments, Inc. (USBI) $500,000 and issued a censure after the firm failed to file dozens of required Suspicious Activity Reports (SARs) over a three-year period.
FINRA Fines U.S. Bancorp Investments $500,000 Over Reporting Failures
Between April 2020 and August 2023, USBI reportedly did not submit 42 SARs because it applied an incorrect monetary threshold when assessing suspicious transactions.
The firm used the $25,000 reporting threshold applicable to banks instead of the $5,000 threshold required for broker-dealers.
FINRA added that as a result, activity involving account intrusions, identity theft and internet scams went unreported.
The regulator said the error reflected shortcomings in USBI’s anti-money laundering policies and procedures, in violation of its rules.
Broker-dealers must have systems capable of detecting and reporting transactions that meet the $5,000 threshold, whereas banks operate under a higher limit in some cases.
The problem is said to have stemmed from a centralised compliance process across USBI and its banking affiliate, which led to the misapplication of the bank standard to brokerage accounts.
USBI discovered the mistake in August 2023 after reviewing a separate FINRA enforcement action.
The firm then undertook remedial steps, including a six-year review of its reporting practices, retroactively filing the missing SARs, and updating internal procedures and staff training.
FINRA noted USBI’s cooperation and prompt self-reporting in determining sanctions. The firm agreed to settle without admitting or denying the findings.
