FINRA Fines Morgan Stanley $10 Million for Anti-Money Laundering Supervisory Failures

Posted on January 2nd, 2019 at 5:08 PM
FINRA Fines Morgan Stanley $10 Million for Anti-Money Laundering Supervisory Failures

From the Desk of Jim Eccleston at Eccleston Law LLC:

FINRA has fined Morgan Stanley Smith Barney $10 million for anti-money laundering program failures under the Bank Secrecy Act and for its failure to comply with Section 5 of the Securities Act of 1933.  

More specifically, in its investigation, FINRA found that Morgan Stanley's automated AML surveillance system had several shortcomings. For instance, FINRA determined that Morgan Stanley’s automated AML surveillance system did not receive critical data from several systems; failed to devote sufficient resources to review alerts; and did not reasonably monitor customers' deposits and trades in penny stocks for potentially suspicious activities.

In addition, FINRA concluded in its findings that Morgan Stanley failed to implement policies, procedures, and controls to establish and maintain a supervisory system reasonably designed to comply with Section 5 of the Securities Act of 1933, which generally prohibits the offer or sale of unregistered securities. Moreover, in particular, FINRA found that Morgan Stanley failed to implement reasonable policies to ensure coordination between branch management and two home office departments for vetting its customers' deposits and sales of penny stocks for certain foreign financial institutions.

Morgan Stanley neither admitted nor denied the charges, but consent to the findings. Morgan Stanley agreed also to devote substantial resources to increase its staffing, improve its automated transaction monitoring system, and revise its policies and procedures with regards to its automated AML surveillance system.

The attorneys of Eccleston Law LLC represent investors and advisors nationwide in securities and employment matters. The securities lawyers at Eccleston Law also practice a variety of other areas of practice for financial investors and advisors including Securities FraudCompliance ProtectionBreach of Fiduciary DutyFINRA Matters, and much more. Our attorneys draw on a combined experience of nearly 65 years in delivering the highest quality legal services. If you are in need of legal services, contact us to schedule a one-on-one consultation today.


Related Attorneys: James J. Eccleston

Tags: james eccleston, eccleston law, eccleston law llc, eccleston, finra, morgan stanley, securities law, money laundering

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