BNP Paribas’ prime brokerage and securities division has been collectively fined $15 million for anti-money laundering (AML) failures by the Financial Industry Regulatory Authority (FINRA), Wall Street’s self-regulating body.
The fine is related to AML failures involving penny stock deposits and resales, and wire transfers that spanned a four-year period between February 2013 and March 2017.
FINRA stated during the period, BNP Paribas did not develop and implement a written AML programme that could detect and report any potentially suspicious transactions.
FINRA also said until 2016, BNP Paribas’ AML programme did not include any surveillance targeting potential suspicious transactions involving penny stocks, despite the French bank accepting the deposit of nearly 31 billion shares of penny stocks worth hundreds of millions of dollars from its clients, including from so-called “toxic debt financiers”.
During the period, FINRA said BNP Paribas had processed more than 70,000 wire transfers with a total value of $230 billion, including more than $2.5 billion sent in foreign currencies, whereby the bank did not review these transactions to determine whether they involved any high-risk entities or jurisdictions.
Although BNP Paribas identified many deficiencies as early as January 2014, it did not fully revise its AML programme until March 2017, FINRA added.
“In order to be effective, a firm’s AML programme must be tailored to the firm’s business model and types of customer transactions,” said Jessica Hopper, FINRA senior vice president and acting head of enforcement.
“When customers engage in high-risk transactions involving low-priced securities and foreign currencies, the firm must devote sufficient resources to its AML programme, including transaction and wire movement monitoring, to ensure that the system is tailored to the business’s unique money laundering risks.”
In settling this matter, BNP Paribas neither admitted nor denied the charges, but consented to the entry of FINRA’s findings. The settlement also required BNP Paribas to certify within 90 days that its procedures are reasonably designed to achieve compliance in these AML areas.
The fine is the latest by FINRA as it continues to crack down on AML failures by Wall Street’s biggest banks. In December last year, the organisation fined Morgan Stanley $10 million for AML failures over period of five years, relating to suspicious wire and foreign currency transfers, as well as suspicious penny stock deposits and trades.