The Financial Industry Regulatory Authority (FINRA) said Wednesday it has fined Banorte-Ixe Securities International, Ltd. $475,00 for not having adequate anti-money laundering procedures in place.
Because of the firm’s AML compliance failures, it opened an account for a corporate customer owned by an individual with reported ties to a drug cartel. And it didn’t detect, investigate or report the suspicious, overly rapid movement of $28 million in or out if the account.
In addition to the fine, FINRA suspended Banorte’s former AML and Chief Compliance Officer, Brian Anthony Simmons, for 30 days. He was responsible for the firm’s AML procedures and for monitoring suspicious activities.
FINRA said Banorte, which often serviced Mexican clients investing in U.S. and global securities, had three failures in its AML program.
First, the company didn’t properly investigate suspicious activities. The Bank Secrecy Act requires broker-dealers to report certain suspicious transactions that involve at least $5,000 in funds or other assets to the Financial Crimes Enforcement Network. Banorte lacked an adequate system to identify suspicious activity, so it failed to investigate and report the activity in three customer accounts.
Second, Banorte did not adopt AML procedures adequately tailored to its business, relying instead on off-the-shelf procedures that weren’t customized to the unique risks involved with opening accounts, transferring funds and making transactions for customers located in Mexico, a high-risk jurisdiction.
Third, Banorte did not fully enforce its AML program as written.
In settling the matter, Banorte and Simmons neither admitted nor denied the charges but consented to FINRA’s findings.
FINRA’s January 28, 2014 release can be found here.
Julie DiMauro is the executive editor of FCPA Blog and can be reached here.