A broker-dealer agreed to pay $10 million to settle FINRA charges for failing to establish and enforce an anti-money laundering ("AML") program that complies with the Bank Secrecy Act and related regulations.
According to the FINRA Order, FINRA discovered during several examinations that Morgan Stanley Smith Barney LLC ("Morgan Stanley") did not have the required policies and procedures to detect and report potentially suspicious activity. FINRA alleged that between approximately 2011 and 2016 Morgan Stanley failed to:
- ensure that its wire transfer system sent all relevant information to its automated AML surveillance system;
- devote the necessary resources to review the alerts created by the automated AML system;
- "monitor customers' deposits and trades of low-priced securities" (i.e., "penny stocks") for AML issues; and
- adequately monitor correspondent accounts of certain foreign financial institutions.
FINRA also found that Morgan Stanley had taken extraordinary corrective steps and devoted substantial resources since 2013 to improve its AML policies and procedures.
Morgan Stanley neither admitted to nor denied FINRA's allegations.
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