AML Policies – Are You At Risk?

Suffice it to say, a BD or RIA without an AML policy is or should be unheard of.  Just having a policy, however, is not enough as one California firm just found out the hard way.

FINRA this month fined Finance 500, Inc. $400,000 and suspended one of its principals for 9 months for failing to pay closer attention to its AML policy.  In short, Finance 500 had an AML policy which required heightened scrutiny of “high risk” accounts, but FINRA found that policy was not reasonably tailored the Finance 500’s business.  A substantial portion of one of Finance 500’s branch office’s business was low-priced stock trading.  Finance 500’s AML policy, however, failed to provide for the specific monitoring of low-priced stock trading.  

The lesson?  Please make sure your policies, such as AML, are specifically tailored to fit your business and your clients.   General policies are not enough, and the consequences can be quite painful.

Daniel D. Hill is an investment and securities lawyer and a trusted advisor to numerous local, national, and international businesses.