24 January 2018
visit www.nextgenbanking.co.uk/

Finra fines Scottrade $600,000 for AML failings

26 October 2009  |  8050 views  |  0 magnifying glass

US online brokerage Scottrade has been hit with a $600,000 fine for failing to establish and implement an adequate anti-money laundering programme for its Internet-based business model.

The Financial Industry Regulatory Authority (Finra) says that between April 2003 and April 2008, Scottrade operated an inadequate AML programme.

Indeed, from April 2003 through January 2005, Scottrade did not have any systematic or automated programme to detect potentially suspicious money movement or securities transactions, relying instead on a manual system.

Until June 2004, Scottrade's AML compliance officer was the sole employee specifically charged with investigating referrals to determine whether activity was "suspicious" and therefore reportable.

In February 2005, the firm finally implemented a proprietary, automated system but Finra says it was inadequate because it was primarily designed to monitor for and detect suspicious money movement.

Under Scottrade's automated filter-based system, when suspicious activity triggered one of the filters, it generated an alert to the AML analysts responsible for investigating the alerts. The analysts only reviewed for potentially suspicious trading activity if there was money movement into or out of an account that independently triggered one of the filters.

The regulator has now instructed online firms such as Scottrade to consider conducting computerised surveillance of account activity to detect suspicious transactions.

Susan Merrill, chief of enforcement, Finra, says: "Each firm's AML program must be tailored to its business model, including the technological environment in which the firm operates. In this case, despite the large volume of online trading at Scottrade, the firm failed to establish any systematic or automated surveillance until 2005. Then, the automated system the firm implemented remained inadequate because it focused only on suspicious trading that was accompanied by suspicious money movement."

Scottrade neither admitted nor denied the charges but consented to the findings.

In January Finra hit two E*Trade units with a $1 million fine for similar AML policy and procedure failings.

Comments: (0)

Comment on this story (membership required)

Finextra news in your inbox

For Finextra's free daily newsletter, breaking news flashes and weekly jobs board: sign up now

Related stories

Finra fines Citi $600,000 for weak trade supervision

Finra fines Citi $600,000 for weak trade supervision

13 October 2009  |  5087 views  |  0 comments
Programming problems led to $1.1m fine for former Wachovia units

Programming problems led to $1.1m fine for former Wachovia units

24 March 2009  |  5217 views  |  0 comments
E*Trade units fined $1m over AML failings

E*Trade units fined $1m over AML failings

05 January 2009  |  8712 views  |  0 comments
Scottrade launches social networking site

Scottrade launches social networking site

13 August 2008  |  6540 views  |  0 comments
Scottrade caught up in hack attack

Scottrade caught up in hack attack

29 November 2005  |  9633 views  |  0 comments

Related company news


Related blogs

Create a blog about this story (membership required)
visit www.thomsonreuters.infovisit www.fivedegrees.nlvisit www.vasco.com

Top topics

Most viewed Most shared
Banks shift priorities toward growth, digitisation and innovation - surveyBanks shift priorities toward growth, digi...
10066 views comments | 38 tweets | 49 linkedin
Sbanken opens developer portal and invites customers to build their own digital bankSbanken opens developer portal and invites...
8683 views comments | 17 tweets | 11 linkedin
Could distributed ledgers restore the reputation of the MBS market?Could distributed ledgers restore the repu...
7221 views comments | 6 tweets | 9 linkedin
Blockchain security startup Ledger scoops £56 million funding roundBlockchain security startup Ledger scoops...
7063 views comments | 10 tweets | 11 linkedin
Westpac launches iMessage app following PayKey blockageWestpac launches iMessage app following Pa...
6826 views comments | 9 tweets | 3 linkedin

Featured job

Competitive base + commission + benefits
London, UK

Find your next job