FINRA fines Raymond James US$17M

FINRA has fined Raymond James & Associates and Raymond James Financial Services, US$17 million for widespread failures related to the firms’ anti-money laundering programs.

Raymond James & Associates (RJA) was fined $8 million and Raymond James Financial Services (RJFS) was fined US$9 million for failing to establish and implement adequate AML procedures, which resulted in the firms’ failure to properly prevent or detect, investigate, and report suspicious activity for several years.

Read: OSC publishes amendments to OTC derivatives trade reporting rule

RJA’s former AML Compliance Officer, Linda L. Busby, was also fined $25,000 and suspended for three months.

RJA and RJFS’ significant growth between 2006 and 2014 was not matched by commensurate growth in their AML compliance systems and processes. This left RJA and Busby, as RJA’s AML Compliance Officer from 2002 to February 2013, and RJFS unable to establish AML programs tailored to each firm’s business, and forced them instead to rely upon a patchwork of written procedures and systems across different departments to detect suspicious activity.

The end result was that certain “red flags” of potentially suspicious activity went undetected or inadequately investigated. These failures are particularly concerning given that RJFS was sanctioned in 2012 for inadequate AML procedures and, as part of that settlement, had agreed to review its program and procedures, and certify that they were reasonably designed to achieve compliance.

Read: Industry groups react to CSA’s bombshell proposals

Brad Bennett, FINRA’s Executive Vice President and Chief of Enforcement, said, “Raymond James had significant systemic AML failures over an extended period of time, made even more egregious by the fact the firm was previously sanctioned in this area. The monitoring for suspicious transactions is an essential part of protecting our financial system and firms must allocate adequate resources to their AML compliance efforts. This case demonstrates that when there are broad-based failures within specific areas of responsibility, we will seek individual liability where appropriate.”

During its investigation, FINRA found that the firms failed to conduct required due diligence and periodic risk reviews for foreign financial institutions, and that Busby failed to ensure that RJA’s reviews were conducted. RJFS also failed to establish and maintain an adequate Customer Identification Program.

In concluding these settlements, Raymond James & Associates, Inc., Raymond James Financial Services, Inc., and Busby neither admitted nor denied the charges, but consented to the entry of FINRA’s findings.

Read: Woman sentenced to jail over unregistered trading

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.