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FINRA suspends compliance officer, levies highest-ever company AML fine 

The U.S. Financial Industry Regulatory Authority suspended a former AML compliance officer for Brown Brothers Harriman and assessed a record $8 million fine against the firm for its anti-money laundering failures.

The fine is the highest ever imposed by FINRA for an AML-related violation.

FINRA also fined Brown Brothers Harriman's former Global AML Compliance Officer Harold Crawford $25,000 and suspended him for one month.

FINRA said Wednesday that Brown Brothers Harriman (BBH) lacked an adequate AML program designed to monitor and detect suspicious penny stock transactions. It also failed to investigate these transactions, even after such activity was brought to the company's attention.

BBH didn't fulfill its Suspicious Activity Reporting filing requirements and lacked an adequate supervisory system to prevent transactions involving unregistered securities as well.

The transactions cited involved six billion shares of penny stocks distributed on behalf of undisclosed customers in foreign banks located in known bank-secrecy havens, FINRA said.

BBH executed the transactions despite being unable to verify the identity of the stock's beneficial owner, the circumstances under which the stock was obtained, or the seller's relationship to the issuer.

The firm also failed to detect or act on red flags about customer actions that signaled that some stocks were not properly registered or were being offered illegally.

Penny stocks pose heightened risk because of their low cost and are prone to manipulation by fraudsters.

BBH and Crawford didn't admit or deny the charges in their Acceptance, Waiver and Consent with FINRA.


Julie DiMauro is the executive editor of FCPA Blog and can be reached here.

Reader Comments (1)

This is surprising in that its Brown Brothers Harriman, a firm that you would assume would be more than vigilant in its compliance efforts especially as it concerns penny stocks and the related issues. For the compliance person, the question becomes have you not seen the numerous actions involving AML issues surrounding penny stocks that you became jaded to what you needed to do.

In a way, all you can say is "Another one bites the dust"
February 7, 2014 | Unregistered CommenterKevin L. Warmack
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