The Financial Industry Regulatory Authority announced today that it has fined Raymond James & Associates and Raymond James Financial Services a total of $17 million for widespread failures related to the firms’ anti-money laundering programs.
RJA was fined $8 million and RJFS was fined $9 million for failing to establish and implement adequate AML procedures, which resulted in the firms’ failure to properly prevent or detect, investigate, and report suspicious activity for several years. Linda Busby, RJA’s AML compliance officer from 2002 to February 2013, was also fined $25,000 and suspended for three months.
“RJA and RJFS’ significant growth between 2006 and 2014 was not matched by commensurate growth in their AML compliance systems and processes,” FINRA stated. As a result, FINRA said, RJA and Busby and RJFS were unable to establish AML programs tailored to each firm’s business, “and forced them instead to rely upon a patchwork of written procedures and systems across different departments to detect suspicious activity.”
The end result was that certain “red flags” of potentially suspicious activity went undetected or inadequately investigated. According to FINRA, these failures were particularly concerning given that RJFS was sanctioned in 2012 for inadequate AML procedures and, as part of that settlement, had agreed to review its program and procedures, and certify that they were reasonably designed to achieve compliance.
“Raymond James had significant systemic AML failures over an extended period of time, made even more egregious by the fact the firm was previously sanctioned in this area,” Brad Bennett, FINRA’s chief of enforcement, said in a statement. “The monitoring for suspicious transactions is an essential part of protecting our financial system and firms must allocate adequate resources to their AML compliance efforts.”
“This case demonstrates that when there are broad-based failures within specific areas of responsibility, we will seek individual liability where appropriate,” Bennett added.
During its investigation, FINRA found that the firms failed to conduct required due diligence and periodic risk reviews for foreign financial institutions, and that Busby failed to ensure that RJA's reviews were conducted. RJFS also failed to establish and maintain an adequate Customer Identification Program.
In concluding these settlements, RJA, RJFS, and Busby neither admitted nor denied the charges, but consented to the entry of FINRA’s findings.