NYC-based Grand Capital Corp. had a full set of AML procedures that apparently had been compiled by its president/CCO/AMLCO.   FINRA was unable to detect evidence that RR's and principals followed the manual or applied the its guidelines to their scrutiny of customers. 

As a result, Grand Capital agreed to a $20K fine (reduced for financial need) and one of its Registered Principals (Eliezer Grand Homnick) agreed to a $10K fine and other sanctions (one month suspension as principal, 8 hours of AML training) to settle FINRA charges that firm, acting through Homnick, failed to comply with AML requirements.   Homnick is the firm’s President, CCO, and AMLCO (AML Compliance Officer).

    FINRA's Findings.   The firm’s AML compliance program, which Homnick implemented, didn't fully comply with BSA requirements (Bank Secrecy Act) and violated NASD Rules 3011(a) and (b).  The firm’s AML procedures in effect required:

• the firm to make a preliminary risk assessment for each existing and potential customer of the firm;
• firm’s RR's to document any significant information they learned pursuant to such risk
  • However, the firm didn't create or maintain written risk assessments for its customers. 
• scrutiny of the activities of each firm customer organized as a limited liability company (LLC) - i.e., firm and RR's were to assess correlation between their business activities and their formation documents, and investigate further to determine the customer’s risk profile.
  
  • However, risk profiles were not assembled.

FINRA further found that:

• Several LLC accounts, which appeared to engage in suspicious transactions, had not provided formation documents.
• Firm employees, who were to report suspicious customer activities, did not follow the firm's AML procedures. 
• RR's were required, upon detection of suspicious activity in customer accounts, to consult with a designated principal - one of whom was Homnick.
• No RR's reported to, or consulted with, the firm principals about suspicious customer activities.
• No P-SARs (Preliminary Suspicious Activity Reports) were prepared by RR's for any suspicious activities - these forms were to be given to Homnick for his internal review.
• Homnick was assigned responsibility for filing SARs and was responsible for drafting, implementing and maintaining the AML program and procedures at the firm, but he did not file any SARs and did not consider filing any SARs. 
• As a result, numerous suspicious transactions by firm customers led to no action or reasonable investigation by RR's or firm Principals - including no filing of an SAR;  nor was there the rationale for not filing a SAR documented.

This is FINRA Case #2007008158203.    [FINRA Disciplinary Actions for May 2011]