FINRA suspends compliance officer, levies highest-ever company AML fine 
Friday, February 7, 2014 at 3:08AM
Julie DiMauro in AML, Brown Brothers Harriman, Financial Industry Regulatory Authority, Harold Crawford, penny stocks

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.

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