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Screenshot of a breaking news alert e-mail from Q2 2017
US securities regulator The Financial Industry Regulatory Authority (FINRA) has announced a fine against units of Raymond James Financial, Inc. (NYSE:RJF) totaling $17 million for what it called widespread failures related to the firm’s anti-money laundering (AML) programs. The fines were for failing to establish and implement adequate AML procedures, which resulted in Raymond James’ failure to properly prevent or detect, investigate, and report suspicious activity for several years.
Raymond James’ former AML Compliance Officer, Linda L. Busby, was also fined $25,000 and suspended for three months.
FINRA found that the significant growth of Raymond James units between 2006 and 2014 was not matched by commensurate growth in their AML compliance systems and processes. This left Raymond James and Busby as Compliance Officer unable to establish AML programs tailored to each of the firm’s businesses. It also forced them instead to rely upon a patchwork of written procedures and systems across different departments to detect suspicious activity.
The end result was that certain ‘red flags’ of potentially suspicious activity went undetected or inadequately investigated. These failures are particularly concerning given that a Raymond James unit was sanctioned in 2012 for inadequate AML procedures and, as part of that settlement, had agreed to review its program and procedures, and certify that they were reasonably designed to achieve compliance.
Brad Bennett, FINRA’s Executive Vice President and Chief of Enforcement, said:
Raymond James had significant systemic AML failures over an extended period of time, made even more egregious by the fact the firm was previously sanctioned in this area. The monitoring for suspicious transactions is an essential part of protecting our financial system and firms must allocate adequate resources to their AML compliance efforts. This case demonstrates that when there are broad-based failures within specific areas of responsibility, we will seek individual liability where appropriate.
During its investigation, FINRA found that the firm failed to conduct required due diligence and periodic risk reviews for foreign financial institutions, and that Busby failed to ensure that the company’s reviews were conducted. Raymond James also failed to establish and maintain an adequate Customer Identification Program.
In concluding these settlements, the Raymond James units and Busby neither admitted nor denied the charges, but consented to the entry of FINRA’s findings.
More on the FINRA fine to Raymond James and Linda Busby can be seen here.