FINRA Fines RBC Capital Markets $275,000 Over Anti-Money Laundering Compliance Deficiencies
From the desk of Jim Eccleston at Eccleston Law
The Financial Industry Regulatory Authority (FINRA) has censured and fined RBC Capital Markets $275,000 after determining that the firm failed to establish and implement reasonable anti-money laundering (AML) policies and procedures. According to AdvisorHub, the regulator found that deficiencies in the firm's automated surveillance system prevented it from identifying certain potentially suspicious transactions for several years.
According to a FINRA Acceptance, Waiver and Consent (AWC) letter, RBC improperly configured its automated transaction monitoring system from 2016 through September 2023. As a result, the system failed to detect certain activity that could indicate potential money laundering, including fund movements that did not align with a customer's expected account activity.
FINRA found that RBC violated rules requiring member firms to develop and maintain effective AML programs, as well as FINRA Rule 2010, which requires firms to observe high standards of commercial honor and just and equitable principles of trade. The regulator initiated its investigation following a routine examination of the firm.
RBC resolved the matter without admitting or denying FINRA's findings.
According to AdvisorHub, an RBC spokesperson stated that the firm was pleased to resolve the matter and remains committed to maintaining strong compliance practices while continuing to strengthen its monitoring capabilities to meet regulatory expectations.
The settlement explains that RBC implemented three automated surveillance rules in 2016 to identify potential money laundering activity. However, FINRA determined that each rule contained significant flaws.
One rule was designed to identify accounts used primarily to move funds without corresponding securities trading. Instead of evaluating an account's total balance, the system relied on the account's margin balance, which generally remained below the alert threshold and prevented the rule from identifying suspicious activity.
A second surveillance rule attempted to identify accounts with substantially matching credit and debit transactions. According to FINRA, the threshold for generating alerts was set too high, rendering the rule ineffective.
A third rule monitored accounts with a high volume of internal transfers. FINRA found that the rule generated excessive false positives because it routinely flagged transfers between accounts owned by the same customer or related parties, limiting its effectiveness in detecting suspicious activity.
FINRA also cited weaknesses in RBC's compliance governance. According to the AWC, one compliance group evaluated the effectiveness of transaction monitoring while a separate group handled the removal of ineffective surveillance rules. FINRA found that the groups failed to coordinate their efforts or escalate concerns, allowing ineffective monitoring rules to remain in place for years.
As a result, FINRA concluded that RBC failed to identify, investigate, and report suspicious transactions that the surveillance rules were intended to detect. The regulator did not identify the number of transactions that went undetected, nor did it allege that any money laundering actually occurred.
According to AdvisorHub, RBC revised its AML procedures in 2023 to require periodic reviews of its automated monitoring rules to help ensure they effectively detect potentially suspicious activity.
The enforcement action continues FINRA's recent focus on AML compliance. AdvisorHub notes that the regulator previously censured and fined Cetera Financial Group $1.1 million in January over deficiencies in its AML supervisory system. In March 2025, FINRA also censured and fined Sanctuary Wealth Management $150,000 for AML compliance failures.
Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.
Tags: eccleston, eccleston law, finra enforcement, aml compliance, rbc capital markets, securities law, regulatory fines
