FINRA fines Credit Suisse securities unit $16.5 million for ‘significant AML deficiencies’ 
Monday, December 5, 2016 at 10:28AM
Richard L. Cassin in AML, Credit Suisse, FINRA

The Financial Industry Regulatory Authority said Monday it fined Credit Suisse Securities (USA) LLC $16.5 million for anti-money laundering and supervision violations.

Credit Suisse’s suspicious activity monitoring program was deficient, FINRA said. The bank primarily relied on its registered representatives to identify and escalate potentially suspicious trading.

In practice, "risk activity was not always escalated and investigated, as required," FINRA said.

And Credit Suisse's automated surveillance system to monitor for potentially suspicious money movements "was not properly implemented," FINRA said.

"A significant portion of the data feeds into the system were missing information or had other issues that compromised the system’s effectiveness," FINRA said.

The bank also failed to adequately investigate potentially suspicious activity it identified. FINRA said Credit Suisse didn't have adequate staff to review "tens of thousands of alerts" generated each year.

FINRA is the biggest independent regulator for all securities firms doing business in the United States. Last year it brought 1,512 disciplinary actions against registered brokers and firms and levied $95 million in fines.

FINRA said Monday that Credit Suisse expected its registered representatives, who were the primary contact with the customers, to be the first line of defense against potential AML problems.

The sales reps were expected to . . . .

. . . . identify and report to its AML compliance department activity or transactions that were unusual or suspicious based on “red flags” described in Credit Suisse’s AML policies. Its AML compliance department was then required to investigate the potentially suspicious activity, document its findings and file Suspicious Activity Reports (SARs) where appropriate.

But the bank's systems and procedures that were supposed to monitor trading weren't designed to detect potentially suspicious activity.

FINRA also said,

Credit Suisse’s reliance on representatives to escalate potentially suspicious trading failed to account for the fact that most orders it received from its foreign affiliates came in to the firm electronically and thus were not seen by the firm’s sales traders.

Credit Suisse self-identified some of the deficiencies and retained a consulting firm to help evaluate and fix them.

But the bank then failed to devote adequate resources to resolve the compliance issues "in a timely fashion, and some of the deficiencies remain unresolved today," FINRA said Monday.

Credit Suisse didn't admit or deny the charges but consented to entry of FINRA's findings.

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FINRA's December 5, 2016 enforcement action against Credit Suisse Securities (USA) LLC is here (pdf).


Richard L. Cassin is the publisher and editor of the FCPA Blog.

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