BNP’s AML program did not include any surveillance targeting potential suspicious transactions involving penny stocks according to FINRA
The Financial Industry Regulatory Authority fined BNP Paribas Securities Corp. and BNP Paribas Prime Brokerage Inc. $15 million on Thursday for anti-money laundering program and supervisory failures involving penny stock deposits and resales, and wire transfers, that spanned four years.
From February 2013 to March 2017, despite its penny stock activity, BNP failed to develop and implement a written AML program “that could reasonably be expected to detect and cause the reporting of potentially suspicious transactions,” FINRA states.
“Until 2016, BNP’s AML program did not include any surveillance targeting potential suspicious transactions involving penny stocks, even though BNP accepted 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.”
BNP also failed to implement any supervisory systems or written procedures to determine whether resales of securities, including the penny stocks deposited by its customers, complied with the registration requirements of Section 5 of the Securities Act of 1933, FINRA states.
“As a result, BNP facilitated the removal of restrictive legends from approximately $12.5 million worth of penny stocks without any review to evaluate the transactions for compliance with Section 5.”
During the same period, BNP processed more than 70,000 wire transfers with a total value of over $230 billion, including more than $2.5 billion sent in foreign currencies, according to FINRA.
“BNP’s AML program did not include any review of wire transfers conducted in foreign currencies, and did not review wires conducted in U.S. dollars to determine whether they involved high-risk entities or jurisdictions.”
As part of the settlement, FINRA also required BNP to certify within 90 days that its procedures are reasonably designed to achieve compliance in these areas. In settling the matter, BNP neither admitted nor denied the charges but consented to the entry of FINRA’s findings.