FINRA Levies $17 Million Fine on Raymond James for AML Compliance Failures

The Financial Industry Regulatory Authority (FINRA) announced today in a statement that it has fined Raymond James & Associates (RJA) and Raymond James Financial Services (RJFS) $17 million for widespread failures relating to both firms’ Anti-Money Laundering (AML) Anti-Money Laundering (AML) Anti-money laundering (AML) is a term that describes laws, processes, and regulations that are intended to prevent illegally obtained funds from being disguised as income gained through legitimate means. The fundamental purpose of the AML laws is to help safeguard, detect, and report suspicious activity including the predicate offenses to money laundering and terrorist financing, such as securities fraud and market manipulation.Most exchanges have AML measures that include identity verification Anti-money laundering (AML) is a term that describes laws, processes, and regulations that are intended to prevent illegally obtained funds from being disguised as income gained through legitimate means. The fundamental purpose of the AML laws is to help safeguard, detect, and report suspicious activity including the predicate offenses to money laundering and terrorist financing, such as securities fraud and market manipulation.Most exchanges have AML measures that include identity verification Read this Term) programs.

The parties relied on a patchwork of written procedures to detect suspicious activity.

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The firms were penalised for failing to establish and implement sufficient AML procedures, resulting in their failure to properly prevent or detect, investigate, and report suspicious activity for several years.

FINRA also fined RJA’s former AML Compliance Officer, Linda Busby, $25,000, additionally suspending her for three months.

Details of the case revealed that both firms had experienced significant growth between 2006 and 2014 but this was not matched by commensurate growth in their AML compliance systems and processes. The parties instead relied on a patchwork of written procedures and systems across different departments to detect suspicious activity.

The outcome was that certain 'red flags' of potentially suspicious activity went undetected or inadequately investigated. The failures were particularly concerning considering that RJFS was sanctioned in 2012 for inadequate AML procedures and, as part of the settlement, had agreed to review its program and procedures and certify that they were reasonably designed to achieve compliance.

FINRA’s Executive Vice President and Chief of Enforcement, Brad Bennett, commented: “Raymond James had significant systemic AML failures over an extended period of time, made even more egregious by the fact the firm was previously sanctioned in this area. This case demonstrates that when there are broad-based failures within specific areas of responsibility, we will seek individual liability where appropriate.”

Failure To Conduct Due Diligence

During its investigation, FINRA found that the firms failed to conduct the required due diligence and periodic risk reviews for foreign financial institutions and that Busby failed to ensure that RJA's reviews were conducted. RJFS also failed to establish and maintain an adequate Customer Identification Program.

The parties involved neither admitted nor denied the charges but consented to the entry of FINRA’s findings.