FINRA Fines Portfolio Resources AML Gaps

On May 16, FINRA fined Portfolio Resources for AML monitoring.

  • Portfolio Resources Group fined $100k, and to meet AML compliance standards.

Alleged Violations

  • AML compliance officer or his designee would manually monitor account activity.
  • The firm also used a system that provided alerts to assist in its AML monitoring.
  • AML systems failed to identify, transactions that should have triggered red flags.
  • Significant portion of their customers were from particular country and engaged
    in activity in their firm accounts that would be more indicative of bank accounts.
  • Policy was not tailored, to the risks associated with this type of account activity.

Compliance Policy Gaps

  • Policy stated AML compliance officer would manually monitor sufficient amount
    of account activity, to allow it to identify suspicious activity, and then file SARs.
  • Utilized system that provided alerts to assist in monitoring for AML compliance.
  • However failed to identify or document detection, investigation of due diligence
    of suspicious trades by customer that involved high levels of money movement.
  • Little or no corresponding securities trades that should have triggered red flags.