The Securities and Exchange Commission (SEC) today announced settled charges against registered broker-dealer Merrill Lynch, Pierce, Fenner & Smith Incorporated for failing to file numerous Suspicious Activity Reports (SARs) from April 2020 through September 2024 in violation of broker-dealer reporting and recordkeeping requirements.

Merrill Lynch agreed to pay a $7.5 million civil penalty to settle the charges.

According to the SEC’s order, Merrill relied on Bank of America Corporation’s enterprise-wide Bank Secrecy Act/Anti-Money Laundering program to help fulfill Merrill’s independent SAR-filing responsibilities.

The order finds that Bank of America used a transaction monitoring software system to aggregate potentially suspicious events into “event groups” and assign the groups risk scores. According to the order, only those groups with risk scores above a certain threshold were investigated for potential SAR filings, notwithstanding that internal analyses showed, at least as early as April 2020, that certain groups with risk scores below the threshold, if investigated, would result in SAR filings.

The order further finds that, during the relevant period, Merrill Lynch failed to file numerous SARs due to its failure to investigate such event groups with risk scores below the threshold.

The SEC’s order finds that Merrill violated Section 17(a) of the Securities Exchange Act of 1934 and Rule 17a-8 thereunder. Without admitting the findings, the firm agreed to the entry of a cease-and-desist order, a censure, and to pay a civil penalty of $7.5 million.