[ by Howard Haykin ]

The president of a Franklin, MA, broker-dealer who also served as its AML Compliance Officer, was disciplined by FINRA for violating over an extended period Section 314(a) of the Patriot Act. 

Profile of Respondent. In 1981, Robert Joseph first became registered with FINRA as a Series 7 General Securities Rep and as a Serires 24 General Securities Principal.  From 1988 to 5/31/11, he was associated with Capitol Securities & Associates, Inc. as a General Securities Principal and in other capacities. He currently is registered as a General Securities Principal and in other capacities through another member firm.  Joseph had no prior FINRA disciplinary history.

Pursuant to Section 314(a) of the Patriot Act ... the Financial Crimes Enforcement Network ("FinCEN) adopted regulations that require financial institutions, upon receiving an information request from FinCEN, to search their records expeditiously to determine if the institution maintains or has maintained any account for, or has engaged in any transaction with, each individual, entity, or organization identified in the request.

FINRA Findings and Allegations. Over a 4-year period, from about July 2006 to July 2010, Joseph served as President of Capitol Securities and as its AML Compliance Officer.  During that period, he is alleged to have knowingly failed on about 107 occasions to access the FinCEN web site to check the names FinCEN had posted against the Firm's customer base and list of individuals/entities with whom the firm had transacted for possible matches.  [This would have been in response to bi-weekly information requests that FinCEN sent to B/D's and other financial institutions pursuant to Section 314(a) of the Patriot Act and regulations adopted thereunder.

Failure to review Section 314(a) requests, would be in violation of NASD Conduct Rule 3011(b) (for conduct before 1/1/10), FINRA Rule 3310(b) (for conduct after 12/31/09), NASD Conduct Rule 2110 (for conduct before 12/15/08) and FINRA Rule 2010 (for conduct after 12/14/08.).

FINRA Sanctions. To settle the FINRA charges, Joseph agreed to pay a $5K fine, and to serve a 3-month suspension as principal.

This was a case taken from FINRA Disciplinary Actions for September.  For further details, go to:  [FINRA AWC #2011028251901].