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Stories of Interest
- Deutsche Bank ‘Beyond Repair’ as Trading Drops - Autonomous Research
- Guggenheim Partners CEO Might Step Down
- Wachovia Customer Sues Wells Fargo Over FundSource Losses - Bill Singer
- Credit Downgrade for Wells Fargo Due to Fake Account Scandal
- CFTC Commissioner Quintenz Named Sponsor of the Technology Advisory Committee
- Harbour and Geneos Customers Win FINRA Arbitration Against Stockbroker - Bill Singer
- Equifax Suffered a Hack Almost Five Months Earlier Than the Date It Disclosed
- The World’s Biggest Wealth Fund Hits $1 Trillion
- At Jefferies, Like Wall Street, Trading Cedes to Banking
- Ex-SAC Trader Who Pleaded Guilty to Insider Trading Just Remembered He’s Innocent
- JPMorgan Turns to Amazon for Retail 'Customer Experience'
- Goldman Sachs Names Ken Hitchner as New Chairman for Asia Pacific
- Judge All but Tosses SEC Case Against ‘Rogue’ Trader And Ex-FBI Informant Guy Gentile
- 'Boys are #1 Among NFL's Most Valuable Teams
- Fake Tax Returns - Your Next Worry After the Equifax Breach
- FINRA DR Recruiting Arbitrators, Mediators at Congressional Black Caucus Conference
- JPMORGAN: Here's who we think will replace Warren Buffett at Berkshire Hathaway
- Mueller to Search Facebook for Russia-Linked Accounts
- Mark Gomes, Market Analyst and Trade Scalper Settles with SEC
- Equifax Waives Credit Lock Fees For Consumers, Amid Criticism
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NEWSLETTERS & ALERTS
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.