According to reports, The Financial Industry Regulatory Authority (FINRA) has fined Credit Suisse Securities LLC $16.5 million for anti-money laundering (AML), supervision and other violations.
First, Credit Suisse reportedly primarily relied on its registered representatives to identify and escalate potentially suspicious trading, including in microcap stock transactions. In practice, however, high-risk activity was not always escalated and investigated, as required.
Second, the firm’s automated surveillance system to monitor for potentially suspicious money movements was allegedly not properly implemented. A significant portion of the data feeds into the system were purportedly missing information or had other issues that compromised the system’s effectiveness. The firm also chose not to utilize certain available scenarios designed to identify common suspicious patterns and activities, and it failed to adequately investigate activity identified by the scenarios that the firm did utilize.
Credit Suisse allegedly failed to effectively review trading for AML reporting purposes, from January 2011 through September 2013, according to FINRA. The firm expected its registered representatives, who were the primary contact with the customers, to identify and report to its AML compliance department activity or transactions that were unusual or suspicious based on “red flags” described in Credit Suisse’s AML policies. Its AML compliance department was then required to investigate the potentially suspicious activity, document its findings and file Suspicious Activity Reports (SARs) where appropriate.
In addition, Credit Suisse’s reliance on representatives to escalate potentially suspicious trading failed to account for the fact that most orders it received from its foreign affiliates allegedly came in to the firm electronically and thus were not seen by the firm’s sales traders.
FINRA also found that from January 2011 through December 2015, Credit Suisse allegedly failed to effectively review potentially suspicious money transfers. The firm apparently used an automated surveillance system to identify red flags of potentially suspicious activity. FINRA found that the firm failed to implement the automated surveillance system properly, including by failing to ensure that the data that was being fed into the system was adequate and by failing to utilize available scenarios that were applicable to the money-laundering risks presented by its business.
Additionally, FINRA found that Credit Suisse’s procedures were allegedly deficient as it relates to compliance with the prohibition of the sale of unregistered securities. FINRA’s AML Investigative Unit identified the violations during an examination of the firm. The investigation was conducted by the Department of Enforcement.
Credit Suisse neither admitted nor denied the charges, but consented to the entry of FINRA’s findings.
For FINRA’s full findings visit their website, www.finra.org.
The foregoing information, which is all publicly available, is being provided by The White Law Group. The White Law Group is a national securities fraud, securities arbitration, and investor protection law firm with offices in Chicago, Illinois and Vero Beach, Florida.
For more information on the firm and it’s representation of investors, visit www.whitesecuritieslaw.com.
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