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Wall Street Giant Morgan Stanley Has Been Fined $5.5m For Violating Anti-Money Laundering (AML) Rules

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The American Financial Industry Regulatory Authority (FINRA) has announced that Wall Street Giant Morgan Stanley has been fined $5.5m for violating Anti-Money Laundering (AML) rules for over five years.

According to FINRA, Morgan Stanley breached three major requirements  of the Bank Secrecy Act of 1970. The agency detailed that though the Wall Street giant automated its Anti-Money Laundering (AML) surveillance system, it did not receive critical data from several systems, which undermined the firm’s surveillance of tens of billions of dollars of wire and foreign currency transfers, including transfers to and from countries known for having a high money-laundering risk.

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In addition, Morgan Stanley did not put appropriate measures in place to review alerts generated by its automated Anti-Money Laundering (AML) surveillance system. Moreover, the firm was also accused of neglecting the alerts without investigating the suspicious wire transfers. The bank also failed to monitor customers’ deposits and trades in penny stocks for potentially suspicious activity. Furthermore, deposits and trades made by customers in penny stocks, over $164 million spread across 2.7 billion shares, remained unmonitored.

Susan Schroeder, the Executive Vice President at FINRA, commented on the issue saying: “As we stated in our Report on FINRA Examination Findings released earlier this month, FINRA continues to find problems with the adequacy of some firms’ overall Anti-Money Laundering (AML) programs, including allocation of AML monitoring responsibilities, data integrity in AML automated surveillance systems, and firm resources for AML programs.”

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The agency also found that although Morgan Stanley shared the responsibility for vetting its customers’ deposits and sales of penny stock among its branch management and two home office departments, it failed to establish a coordination system among them to help checkmate suspicious activities.

With the increasing suspicious activities in the market, FINRA has tightened its regulatory framework and the process of background checks for broker hires and announced the election of additional three governors to its board in mid-2018.

“Firms must ensure that their AML programs are reasonably designed to detect and cause the reporting of potentially suspicious activity,” Schroeder added.

Wall Street Giant Morgan Stanley Has Been Fined $5.5m For Violating Anti-Money Laundering (AML) Rules

The American Financial Industry Regulatory Authority (FINRA) has announced that Wall Street Giant Morgan Stanley has been fined $5.5 for violating Anti-Money Laundering (AML) rules for over five years.

According to FINRA, Morgan Stanley breached three major requirements  of the Bank Secrecy Act of 1970. The agency detailed that though the Wall Street giant automated its Anti-Money Laundering (AML) surveillance system, it did not receive critical data from several systems, which undermined the firm’s surveillance of tens of billions of dollars of wire and foreign currency transfers, including transfers to and from countries known for having a high money-laundering risk.

In addition, Morgan Stanley did not put appropriate measures in place to review alerts generated by its automated Anti-Money Laundering (AML) surveillance system. Moreover, the firm was also accused of neglecting the alerts without investigating the suspicious wire transfers. The bank also failed to monitor customers’ deposits and trades in penny stocks for potentially suspicious activity. Furthermore, deposits and trades made by customers in penny stocks, over $164 million spread across 2.7 billion shares, remained unmonitored.

Susan Schroeder, the Executive Vice President at FINRA, commented on the issue saying: “As we stated in our Report on FINRA Examination Findings released earlier this month, FINRA continues to find problems with the adequacy of some firms’ overall Anti-Money Laundering (AML) programs, including allocation of AML monitoring responsibilities, data integrity in AML automated surveillance systems, and firm resources for AML programs.”

The agency also found that although Morgan Stanley shared the responsibility for vetting its customers’ deposits and sales of penny stock among its branch management and two home office departments, it failed to establish a coordination system among them to help checkmate suspicious activities.

With the increasing suspicious activities in the market, FINRA has tightened its regulatory framework and the process of background checks for broker hires and announced the election of additional three governors to its board in mid-2018.

“Firms must ensure that their AML programs are reasonably designed to detect and cause the reporting of potentially suspicious activity,” Schroeder added.

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