FINRA's Settlement with a Compliance Officer for Alleged AML Violations May Not Signal a New Normal
 

On May 24, 2016, Bradley Bennett, the executive vice president of enforcement of the Financial Industry Regulatory Authority (“FINRA”), reportedly commented on FINRA’s future focus on individuals in anti-money laundering (“AML”) enforcement at a panel during FINRA’s 2016 Annual Conference.  Bennett’s speech came just days after FINRA announced a $17 million settlement of AML claims against Raymond James Financial Services Inc. and Raymond James & Associates Inc., which included a three month suspension and $25,000 fine for Raymond James compliance officer Linda L. Busby for her alleged failure to supervise and screen suspicious activity.  In his remarks, Bennett stressed that the decision to suspend the compliance officer will be a rare one, for example, in instances where compliance officers (1) knew they lacked sufficient resources to properly supervise their firms, but (2) failed to elevate the issue to management. 

Bennett’s comments may be read to suggest that compliance officers can avoid FINRA penalties as long as they actively raise potential problems (e.g., as to funding of their compliance programs) internally.  Of course, this guidance risks creating a one-way incentive for compliance officers to increase their demands for resources and create a paper trail showing that they were warning superiors of compliance risks of failing to provide greater funding.  But ultimately, that approach is unlikely to insulate compliance officers if they cannot document that they understood the risks and that the demands that made for greater resources were properly tailored to the program needs.  In that respect, his comments simply highlight that every charging decision involving an individual—particularly compliance officers—will continue to be highly nuanced.