By Courtney Werning
Charles Schwab was censured by FINRA, fined $175,000, and ordered to review its Anti-Money
Laundering policies with respect to detecting and reporting suspicious
incoming wire transfers. According to FINRA's enforcement action,
the firm opened accounts for a new investor who stated on her application
that she was an employee of a U.S. financial services firm.
She then sent $96 million total in four wire transfers from an account
the financial services firm owned to the new Charles Schwab account. The
$96 million was stolen funds from her employer. No one at Charles Schwab
commenced an inquiry into the incoming wire transactions, which were in
the amounts of $10 million, $21 million, $30 million, and $35 million
over the span of 12 days.
As part of an overall Anti-Money Laundering program, all brokerage firms
must establish and implement policies and procedures that can be reasonably
expected to detect and cause the reporting of suspicious transactions.
FINRA found that Charles Schwab failed to implement policies and procedures
that could have reasonably detected and caused the reporting of suspicious activity.
FINRA alleged that it was because of these supervisory deficiencies that
the suspicious wire transfers went unnoticed, uninvestigated, and unreported
by the firm. Charles Schwab has agreed to conduct a comprehensive review
of the adequacy of its policies, systems, procedures, and training with
respect to detecting and reporting suspicious transfers.