Raymond James Fined by FINRA for AML Failures

• Posted on: Jun 16 2016

How do anti-money laundering programs detect suspicious activity?

The Financial Industry Regulatory Authority (“FINRA”) announced in May that it fined two Raymond James entities for systemic flaws in their anti-money laundering programs. The units, Raymond James & Associates (RJA) and Raymond James Financial Service (“RJFS”) were fined $8 million and $9 million, respectively. FINRA cited these units for not establishing and implementing adequate procedures over the course of several years.

An investigation by the self-regulatory agency revealed that the firms did not conduct required due diligence and periodic risk reviews for foreign financial institutions and that RJFS also failed to establish and maintain an adequate Customer Identification Program. In addition a former AML compliance officer was fined $25,000 and suspended for three months which highlights the growing trend of regulators holding compliance officers personally accountable for compliance breaches.

Enhanced Regulatory Scrutiny
At the same time, Raymond James success may have made the firm a target of enhanced regulatory scrutiny. In its press release, FINRA noted that the firms achieved significant growth over a ten-year period from 2006 to 2014, but that they failed to establish comprehensive AML programs during this time. Because of this, Raymond James was unable to detect, prevent and report suspicious activity, according to FINRA.

FINRA also found that the compliance officer did not establish AML programs that were suited for each business unit and that “red flags” for suspicious activity were missed. This is not the first time Raymond James was cited for its failure to adhere to AML requirements. RJFS was previously sanctioned in 2012 and agreed to beef up its policies and procedures.

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.” For their part, RJA and RJFS neither admitted nor denied the charges, but consented to the terms of the settlement.

In short, this settlement highlights the importance for financial firms to establish and implement sufficient AML measures as part of a comprehensive compliance program. Given the growing attention that is being paid to money laundering, the consequences of failing to weed out suspicious activity can be drastic. In the end, if your firm needs assistance on any compliance or FINRA related matters, you should engage the services of an experienced attorney.

Tagged with: Business Law, Securities Arbitration