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- FINRA RegNote 17-40: AML/KYC Requirements Under FINRA Rule 3310
- Trump defends Roy Moore: 'He totally denies it'
- Barclays CEO Staley's New Investment Banking Strategy Falters
- FIFO: Senate Plan Lets Mutual Funds Skip A Tax Change That Hurts Individual Investors
- FINRA Introduces New Functionality and Design to Fund Analyzer
- Oyster Bay, NY, and Former Top Official Charged with Defrauding Muni Investors
- State Street Challenging BNY Mellon As Largest Custody Bank
- Changes to FINRA Advisory Committees: Phase 1
- SEC Approves CAT Fee Dispute Resolution Process
- Boston-Area Consultant & Friend Settle SEC Insider Trading Charges
- SEC Chair Clayton: Statement on Status of the Consolidated Audit Trail ('CAT')
- Goldman to Launch $5bn Fund with China Investment Corp.
- Wells Fargo Launches Robo-Adviser Targeting Millenial Investors
- Barclays Fails to End U.S. 'Dark Pool' Class Action
- Goldman Sachs' Chief Risk Officer, Craig Broderick, to Retire
- Time to Renew FINRA Registrations - B/D, IA, Agent, IA Rep, Branches
- New Jersey’s Next Governor Could Be a Democrat Who Worked at Goldman Sachs
- FINRA New York Region Networking Seminar - December 1st
- SEC Approves “Pay-to-Play” and Related Rules for Capital Acquisition Brokers
- Hedge Fund Giant Paul Singer Targeted for Destruction by Steve Bannon
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WWW: Citi International 'Gets Clocked' Over Its AML Program
Citi International Financial Services of San Juan, Puerto Rico, agreed to pay a $5.75 million fine and agreed to revise its WSPs and internal control procedures to settle FINRA charges that its AML program was not reasonably designed to achieve and monitor compliance with the requirements of the Bank Secrecy Act, including policies and procedures reasonably designed to achieve compliance with those requirements.
ABOUT THE RESPONDENT. CIFS, a FINRA member since 1987 and an indirect subsidiary of Citigroup, serves non-U.S. customers residing primarily in Latin America, all of which are required to establish and maintain bank accounts with a banking affiliate of CIFS. During the period relevant to this AWC, CIFS had more than 250 registered reps servicing customer accounts with assets exceeding $7 billion, and the firm processed more than $50 billion worth of customer securities trades. CIFS has no relevant disciplinary history.
FINRA’S SPECIFIC FINDINGS. FINRA expressed several concerns about CIFS’s business: (i) substantially all of its business took place in a geographic region generally considered to present elevated AML risk; and, (ii) it handled a number of customer securities transactions of a kind often associated with elevated AML risk.
Nevertheless, CIFS relied primarily on manual supervisory review of securities transactions that was not sufficiently focused on AML risks and was otherwise insufficient to satisfy the firm’s AML compliance obligations.
- Its system was inadequate for detecting potentially suspicious activity and for evaluating whether transactions should be elevated for closer AML scrutiny and potential reporting.
► Its manual supervisory review of customer securities transactions, in effect until at least July 2013, was not specifically focused on AML risk, and relevant supervisory personnel were not all educated about their responsibilities in the AML context.
- Newly implemented WSPs that called for AML-specific heightened scrutiny were not consistently applied nor transactions elevated for further review. The firm also did not make effective use of automated surveillance to identify potentially suspicious transactions occurring in its customer brokerage accounts.
- The firm delegated to one of its banking affiliates the responsibility for monitoring - through automated surveillance and otherwise—transfers of money between the firm customer brokerage accounts and related customer bank accounts held at banking affiliates.
► Yet, securities transactions and other activity that occurred entirely within the customer’s firm brokerage account were not adequately monitored pursuant to this delegation.
► In some cases, automated alerts related to securities transactions in customer brokerage accounts were closed based on the erroneous assumption that the firm was conducting systematic AML monitoring of the securities transactions and addressing potential AML concerns as appropriate.
This case was reported in FINRA Disciplinary Actions for February 2017.
For details on this case, go to … FINRA Disciplinary Actions Online, and refer to Case #2013036434501.