The Financial Industry Regulatory Authority (FINRA) has fined Actinver Securities, Inc for failures related to its Anti-Money Laundering (AML) program.
Actinver offered its customers Forex services which, FINRA notes, presented an increased money laundering risk. From August 26, 2015 to March 11, 2017, Actinver customers sent or received wires denominated in foreign currencies such as Mexican pesos, Euros, Swiss Francs, British Pounds, Hungarian Forint, and Swedish Krona, totaling over $150 million, involving 286 firm customers. Approximately 93% of these wires were third-party in nature.
Overall, Actinver’s FX wires represented 21% of the firm’s overall wire activity.
Despite this significant volume of currency exchange activity, Actinver failed to tailor its AML program to address this portion of its business. The firm’s AML program had no procedures regarding the review of foreign currency exchange red flags that would warrant investigation for purposes of determining whether to file a SAR. Furthermore, the reports used by the firm to monitor for suspicious activity failed to capture these wires.
In addition, Actinver allowed its customers to maintain accounts used primarily for managing cash, which also presented an increased money laundering risk. Because this service was likely to result in red flags due to a lack of securities transactions, Actinver should have recognized the risk and put in place procedures to mitigate those risks, FINRA says.
From August 26, 2015 to March 11, 2017, Actinver had 200 accounts that engaged in banking activity with little or no securities transactions. Money movement through these accounts amounted to approximately $110 million in incoming funds and approximately $82 million in outgoing funds.
Actinver’s procedures stated that accounts with “an unexplained high level of account activity with very low levels of securities transactions” were considered a red flag of suspicious activity; however, none of Actinver’s reports identified this activity and Actinver’s procedures provided no guidance as to how to detect and evaluate such account activity for purposes of determining whether or not to file a SAR. As a result, Actinver’s procedures were not tailored to address its cash management business.
Therefore, the firm violated FINRA Rules 3310(a) and 2010.
Overall, during the period August 26, 2015 to March 11, 2017, Actinver failed to establish and implement an AML program that could be reasonably expected to detect and cause the reporting of suspicious activity.
Although the firm’s AML program included procedures that required the firm to gather specific information and forms when opening foreign accounts or accounts for Politically Exposed Persons (PEPs), Actinver’s registered representatives frequently failed to obtain these forms or left information blank on the forms.
Also, the firm failed to follow its procedures regarding responses to inquiries from its clearing firm concerning red flags of potentially suspicious activity.
Finally, Actinver failed to have its Chief Executive Officer complete the firm’s Annual Certification Requirement in 2015 and 2017 in violation of FINRA Rules 3130(b) and 2010.
As a part of the settlement with FINRA, Actinver has consented to the imposition of a censure and a fine of $150,000.