31 Dec 2018
The Financial Industry Regulatory Authority (FINRA) has fined Morgan Stanley Smith Barney LLC $10 million for anti-money laundering (AML) program and supervisory shortcomings, including the failure to devote sufficient resources to review potentially suspicious transactions.
FINRA found that Morgan Stanley’s automated AML surveillance system did not receive critical data from several systems, undermining the firm’s surveillance of tens of billions of dollars of wire and foreign currency transfers, including transfers to and from countries known for having high money-laundering risk.
In addition, it failed to devote sufficient resources to review alerts generated by its automated AML surveillance system.
“Consequently Morgan Stanley analysts often closed alerts without sufficiently conducting and/or documenting their investigations of potentially suspicious wire transfers,” FINRA explained.
FINRA also found that Morgan Stanley failed to implement procedures to ensure that it conducted risk-based reviews on a periodic basis of the correspondent accounts it maintained for some foreign financial institutions.
Responding to the penalty, Morgan Stanley said: “We are pleased to have resolved this matter from several years ago. We continuously work to strengthen our controls.”
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