FINRA recently took formal disciplinary action against a New York-based broker-dealer that is affiliated with a Mexican broker-dealer and with a Mexican bank for inadequate anti-money laundering (AML) systems and procedures. FINRA also found that the broker-dealer failed to register 200 to 400 foreign finders who functioned as the firm’s primary points of contact with its Mexican clientele. FINRA considers Mexico to be a high-risk jurisdiction for anti-money laundering purposes. To learn more about this enforcement action and some takeaways, please read our full client alert.
FINRA is not alone in recognizing the money-laundering risk presented by financial entities doing business in Mexico. Financial Crimes Enforcement Network (FinCEN) director Jennifer Shasky Calvery spoke at a January 30, 2014 SIFMA conference about Bank Secrecy Act (BSA) and AML issues from FinCEN’s point of view. Ms. Shasky Calvery stated that FinCEN’s newly established Intelligence Division will help FinCEN stay current on how money is being laundered in the United States, and will share this expertise with law enforcement, regulatory, industry and foreign financial intelligence unit partners. That will enable FinCEN to serve as the cornerstone of the United States’ AML and counter-terrorist financing regime.
In particular, Ms. Shasky Calvery pointed out that FinCEN’s analysis recently revealed that Mexican casas de bolsa (Mexican securities firms) are starting to bring U.S. dollars into the United States and depositing this cash into U.S. financial institutions. To the extent that foreign securities are obtained easily with cash, U.S. firms dealing with foreign firms should be mindful of the cash aspects and source of funding of their business, given the heightened money laundering risks associated with cash. In her remarks, Ms. Shasky Calvery also addressed the importance of a strong compliance culture within financial institutions, the necessity of information sharing within and between financial institutions, and the value of the BSA data that FinCEN receives from financial institutions, in particular from their SAR filings.