On February 5, 2014, FINRA announced that Brown Brothers Harriman & Co. (“BBH”) and its Global Anti-Money Laundering (“AML”) Compliance Officer (the “respondents”) had entered into a Letter of Acceptance, Waiver and Consent (the “Consent Letter”) to settle a FINRA enforcement proceeding that alleged, among other violations, that BBH failed to have an adequate AML program in place to monitor and detect suspicious penny stock transactions. The Consent Letter states that from January 1, 2009 to June 30, 2013, BBH executed transactions or delivered securities involving at least six billion shares of penny stocks, many on behalf of undisclosed customers of foreign banks in known bank secrecy havens. During this period, BBH provided custody and brokerage services to omnibus accounts through which the foreign banks were trading penny stocks for their underlying customers whose identities were not disclosed to BBH. According to the Consent Letter, despite numerous red flags and the high risk nature of penny stock transactions, BBH failed to implement adequate policies and procedures regarding AML procedures to detect, investigate, report, and/or prevent these transactions. In settling the proceeding, BBH agreed to pay a fine of $8 million. FINRA also suspended the BBH’s Global AML Compliance Officer from association with any FINRA member for one month and fined him $25,000. The respondents neither admitted nor denied the charges, but consented to the entry of FINRA's findings. A copy of the Consent Letter can be found here.