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.