Tradewire Securities, LLC (CRD #142348, Miami, Florida) submitted a Letter of Acceptance, Waiver and Consent in which the firm was censured and fined $125,000. See FINRA Case #2009015980301.
Without admitting or denying the findings, the firm consented to the described sanctions and to the entry of findings that it failed to establish and implement adequate anti-money laundering (“AML”) procedures and controls, including requiring due diligence to be performed on correspondent accounts for foreign financial institutions, monitoring new rules proposed under Section 311 of the USA Patriot Act, evidencing its searches of its records as required by Section 314 of the USA Patriot Act, and freezing and prohibiting transactions by persons suspected of terrorist activities under Executive Order #13224. The findings stated that the firm’s AML procedures were inadequate in that it incorrectly identified the firm’s AML compliance officer (AMLCO), incorrectly stated the firm did not maintain customer accounts or maintain accounts for foreign correspondent banks when it did, and incorrectly stated it would not open or maintain private banking accounts or accounts on behalf of senior foreign political figures or public officials when it did. The findings also stated that the firm executed customer transactions for off-shore hedge funds and foreign banks and was required to conduct an annual AML test of its AML program for those years but failed to do so.
The findings also included that the firm failed to have procedures to conduct due diligence, and failed to conduct due diligence on correspondent accounts for two years. The firm failed to collect identifying information in a customer identification program and failed to verify the identity of the owners of delivery versus payment accounts. The firm failed to obtain foreign bank certifications for some of its foreign banks, which maintained correspondent accounts at the firm for two years. FINRA found that the firm failed to develop and implement a written AML compliance program that was reasonably designed to achieve compliance with the Bank Secrecy Act, regulations promulgated thereunder, and applicable FINRA and NASD rules.
FINRA also found that the firm failed to establish an adequate system of supervisory control procedures. The firm failed to review a producing manager’s trading activity, conduct a test of its supervisory control system, provide an annual report about its supervisory control system to senior management, and certify its compliance and supervisory processes.
In addition, FINRA determined that the firm upgraded its computer systems to capture and monitor instant messages (IMs) and email from external email addresses, but the upgrade was not installed on new firm employees’ computers, so it failed to capture, maintain and review incoming and outgoing IMs and email pertaining to some employees. The firm assigned two general securities representatives to review the firm’s email but they were not registered firm principals, so the firm failed to comply with FINRA/NASD rules regarding review of correspondence by a registered firm principal.
Moreover, FINRA found that the firm failed to conduct annual inspections of one office for three years and failed to conduct annual inspections of another office for two years. Furthermore, FINRA found that the firm failed to enforce written supervisory procedures including requiring quarterly reviews of internal computer systems and privacy protections, maintaining all electronic communications, order memoranda to identify the individual who entered and accepted orders on behalf of customers, inspection of branch offices, supervision of employees’ outside brokerage accounts, and physical addresses, rather than post office boxes as customers’ addresses of record.
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