Chapin, Davis, a Baltimore, MD-based broker-dealer, agreed to pay $50K to settle FINRA charges it failed to develop and implement a effective anti-money laundering compliance program ("AMLCP").  FINRA found that:

• the firm’s WSP's, which contained information primarily relating to CIP - i.e., customer identification procedures - offered little else on how to comply with most requirements of the Bank Secrecy Act.  

• in particular, the WSP's contained:  (i) no provisions on conducting customer due diligence and enhanced due diligence;  and,  (ii) insufficient guidance on responding to, and properly documenting responses to, FinCEN information requests. 

• the WSP's didn't address how to monitor for and report suspicious activity.

• the firm failed to conduct an adequate independent test of its AMLCP. 

• the testing, which an independent auditor performed, was deficient by failing to test the firm’s implementation of an SAR surveillance program, AML training program and Bank Secrecy Act requirements, including CIP's.

• the firm failed to establish, maintain and/or enforce a supervisory system and WSP that effectively addressed the recording and supervision of private securities transactions.

• the firm failed to make and keep current all account forms in compliance with Securities Exchange Act Rule 17a-3(17), and NASD Rules 3110(a) and (c). 

This is FINRA Case #2010021065701.    [FINRA Disc. Actions for Feb. 2011]