• Staying Abreast of Regulatory Developments is Key to a Strong Compliance Program
















SEC Charges Wells Fargo Advisors With Anti-Money Laundering Related Violations

May 20, 2022 

The Securities and Exchange Commission charged Wells Fargo Advisors for failing to file at least 34 Suspicious Activity Reports (SARs) in a timely manner between April 2017 and October 2021.

According to the SEC’s order, due to Wells Fargo Advisors’ deficient implementation and failure to test a new version of its internal anti-money laundering (AML) transaction monitoring and alert system adopted in January 2019, the system failed to reconcile the different country codes used to monitor foreign wire transfers. As a result, Wells Fargo Advisors did not timely file at least 25 SARs related to suspicious transactions in its customers’ brokerage accounts involving wire transfers to or from foreign countries that it determined to be at a high or moderate risk for money laundering, terrorist financing, or other illegal money movements. The order also found that, beginning in April 2017, Wells Fargo Advisors failed to timely file at least nine additional SARs due to a failure to appropriately process wire transfer data into its AML transaction monitoring system in certain other situations.


FINRA Issues Reminder About the Scope of Chief Compliance Officer Supervisory Liability

March 17, 2022

FINRA issued a Regulatory Notice reminding member firms about the scope of broker-dealer chief compliance officer (CCO) supervisory liability under FINRA rules.

According to Jessica Hopper, Executive Vice President, FINRA Enforcement, “Chief compliance officers play an important role in facilitating compliance by promoting strong practices that protect investors and market integrity. That does not automatically make them supervisors, subject to FINRA’s supervisory requirements. “This Notice helps to clarify when a CCO is—and is not—subject to potential liability under FINRA’s Supervision rule.”

The Notice discusses the scope of the Supervision Rule (3110), the CCO’s role and how FINRA assesses a CCO’s liability under Rule 3110.  


FINRA Fines Firm for Failures Related to Transmittal of Customer Funds

December 10, 2021

FINRA censured and fined  American Portfolios Financial Services, Inc.$225,000 and required it to certify that it has established and implemented policies, procedures and internal controls reasonably designed to monitor transmittals of customer funds to third parties.

According to FINRA, the firm failed to enforce its existing WSPs relating to such transmittals of customer funds. The findings stated that as a result, a sales assistant associated with the firm converted approximately $390,000 of customer funds through check disbursements and wire transfers. Most of the affected customers were senior citizens. The checks were issued to third parties at addresses associated with the sales assistant’s family members and the wire transfers were to accounts controlled by the sales assistant’s family members. After the firm enhanced its procedures around wire transfers, the sales assistant ceased using wires and instead used checks to implement her scheme. Most notably, the sales assistant caused checks totaling approximately $340,000 to be issued from customer accounts to the same entity she and her family controlled. In connection with each third-party check or wire, the sales assistant falsified the customer authorization form and forged the customer’s signature. After learning about the theft from a customer’s daughter, the firm fired the sales assistant and reimbursed all affected customers. The firm had considered previously, but declined to adopt, an exception report for transmittals from multiple customer accounts to the same third party after it discovered similar misconduct by a registered representative. In addition, the firm failed to enforce its procedures as it did not require or maintain records of signature verification identified in its WSPs, including as it related to the authorization documents falsified by the sales assistant.


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