Sanctuary Wealth’s dealer/seller subsidiary can pay $150,000 to settle FINRA allegations that it fell quick when growing and testing an anti-money-laundering (AML) program that complied with federal legislation.
In accordance with the FINRA settlement launched Monday, Sanctuary Securities did not “develop and implement” an AML program “moderately designed to attain compliance” with the necessities within the Financial institution Secrecy Act, which mandates that b/ds monitor transactions for indicators of cash laundering.
FINRA argued that between January 2022 and July 2024, Sanctuary Securities had written procedures, together with AML pointers. Nonetheless, they weren’t “tailor-made to the agency’s measurement, enterprise mannequin and buyer base” and didn’t meet the compliance necessities.
Significantly, these procedures didn’t determine potential purple flags or give reps “affordable steering” on how one can detect suspicious exercise or how they need to evaluate or doc one if it arose. In accordance with FINRA, the agency additionally didn’t information reps on what sort of stories or different instruments it will use to detect suspicious transactions and the way these stories could be reviewed.
In accordance with FINRA, these procedures fell quick, given the agency’s buyer base, primarily home retail traders. For instance, between April 2022 and 2023, prospects made greater than 40,000 funds and securities transmittals to and from agency accounts. Nonetheless, the agency didn’t have a “affordable” course of for reviewing these transactions for potential AML violations.
Moreover, Sanctuary obtained stories from its clearing agency at factors flagging particular cash actions as “doubtlessly suspicious” with a “heightened cash laundering threat.” However with out the right procedures, Sanctuary allegedly cleared most of the transfers with out documenting whether or not these transfers raised any purple flags.
In a single pattern, FINRA discovered Sanctuary cleared greater than 90% of about 40 cash actions recognized as suspect by its clearing agency, together with transfers by two accounts owned by seemingly unrelated international prospects who each made seven-figure wire transfers to the identical third-party authorized entity that’s domiciled in an unnamed haven famend for financial institution secrecy.
Moreover, as a part of its BSA necessities, Sanctuary should carry out an unbiased AML check every calendar yr. In 2022, it employed a third-party guide, however the check allegedly failed to handle “materials facets” of the AML program, together with that the insurance policies and procedures had been allegedly solely “in draft kind” and hadn’t been permitted by administration.
Representatives from Sanctuary didn’t return requests for remark previous to publication.
Along with the $150,000 superb, Sanctuary agreed to a censure and to submit a report in 60 days verifying that AML revisions to achieve compliance have been made (although Sanctuary didn’t admit or deny the findings as part of the settlement).
Sanctuary Securities is the b/d subsidiary of Sanctuary Wealth. The guardian agency’s community contains greater than 120 accomplice companies all through 30 states, with about $50 billion in property on the platform.
Final yr, the agency acquired tru Independence, a Portland, Oregon-based RIA assist platform that works with about 30 companies managing $12.5 billion in property. After the acquisition, tru continued to function as a separate entity with its personal model and management staff.