FINRA M, Stanley AML $10mn

On Dec. 26, FINRA fined Morgan Stanley $10mn for AML failures.

  • Morgan Stanley Smith Barney fined for failures in AML program and supervision.


  • Had AML program and supervisory failures that spanned a period over five years.
  • Used surveillance system, that did not receive critical data from several systems.
  • Undermined surveillance of tens of billions of dollars of wire and foreign currency transfers, including transfers to, from countries, known for having high AML risk.
  • Alerts generated by automated surveillance system were not reviewed therefore,
    analysts closed alerts, without investigating potentially suspicious wire transfers.
  • There was no monitoring of deposits, trades in penny stock for suspicious activity
    even though customers deposited approximately 2.7 billion shares of penny stock.
  • This resulted in subsequent sales, totaling approximately $164mn in time period.
  • Bank divided vetting of customers’ deposits and sales among branch management.
  • Two of the home office departments lacked reasonable coordination among them.
  • Relied on customer assurances that stock they sought to deposit was unrestricted.
  • No policies, procedures, and controls to ensure periodical risk-based reviews were made of correspondent accounts being maintained for foreign financial institutions.


  • Morgan Stanley Smith Barney fined $10mn for AML failures over five-year period.
  • Cited FINRA Dec. 2018 annual report on exam findings covering AML.