The Financial Industry Regulatory Authority (FINRA), regulatory authority of the New York Stock Exchange (NYSE), announced the signature of a settlement with the investment firm Raymond James Associates, Inc. (RJA), its subsidiary Raymond James Financial Services, Inc. (RJFS) and its former Compliance Officer, Linda L. Busby, for violations of a law related to the implementation and functioning of internal anti-money laundering compliance rules and procedures.
The parties have not admitted nor denied FINRA’s findings. According to the authority, since 2004, both RJA and its subsidiary RJFS experienced growth in their number of employees, agents and financial transactions, but failed to adapt their internal compliance mechanisms to the new reality of the companies, especially in regards to its increased transaction volume.
The settlement mentions a lack of staff in their compliance departments, insufficient rules and procedures for reporting suspicious activities, inadequate internal investigations, failure to identify obvious risks (red flags), failure to conduct periodic reviews of the foreign financial institutions they dealt with and failure to establish and maintain an adequate customer identification program.
RJFS, RJA’s subsidiary, had already settled with FINRA in 2012 as a result of failures in the implementation of its internal policy for the detection of suspicious transactions, in which it agreed to pay a fine of USD $ 400,000 and review its anti-money laundering compliance mechanism in accordance with FINRA’s rules.
Under the new settlement, RJA and RJFS agreed to pay fines totaling USD$ 17 million and review the adequacy of its internal anti-money laundering compliance program by modernizing systems and procedures and training of personnel, which must be certified by FINRA within 180 days, counted from the signing of the agreement.
As part of the recent agreement, the former Compliance Officer of RJA, Linda L. Busby, was also held liable by FINRA for failing to ensure satisfactory implementation and proper functioning of the anti-money laundering procedures and reviews. She will have to pay a fine of USD $ 25,000 and was also suspended from associating with any member of FINRA for three months.
In 2015, the Securities and Exchange Commission (SEC) had entered into similar agreements with other companies in the financial market in which their respective Compliance Officers were also fined.
Settlements with persons responsible for the implementation of compliance programs and the adoption of preventive mechanisms raise concerns in Brazil, where the president of a car manufacturing company was recently convicted of money laundering in the context of the “Zelotes” operation for alleged non-compliance with his anti-money laundering duties as CEO.