U.S. authorities and financial industry regulators penalized the New York-based brokerage unit of a large Chinese bank for failures in its anti-money laundering compliance program, imposing millions in fines.
Industrial and Commercial Bank of China Financial Services LLC, or ICBCFS, cleared and settled billions of penny-stock shares without a sufficient compliance program, according to findings from the Securities and Exchange Commission and the self-regulator Financial Industry Regulatory Authority. The brokerage, a unit of China’s biggest lender, had cleared the transactions on behalf of Chardan Capital Markets LLC, which dealt directly with clients.
Neither filed reports on potentially suspicious transactions despite red flags.
Finra fined ICBCFS $5.3 million and ordered it to retain an independent compliance consultant. The brokerage also agreed to pay the SEC $860,000 without admitting or denying the commission’s findings.
ICBCFS had failed to make changes to its anti-money-laundering program despite a notice in June 2014 from the SEC about its customers engaging in risky penny-stock trading that it had failed to detect, Finra alleged.
Read the original article here: blogs.wsj.com/riskandcompliance
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