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CCO/AML Officer Barred and Fined for Failure to File SARs

The SEC fined and barred a CCO/AML Officer from the industry for failing to file Suspicious Activity Reports and otherwise ignoring his AML due diligence responsibilities.  The SEC accuses the CCO/AML Officer and his firm with ignoring clear red flags that suggested significant churning of penny stocks.  Red flags included questionable customer backgrounds, absence of a business purpose, multiple accounts with the same beneficial owners, rapid transactions, and law enforcement inquiries.  The firm sold over 12.5 billion shares of penny stocks over a 9-month period.  The SEC also charged the firm and its clearing firm.

OUR TAKE: While we certainly don’t condone the CCO’s inactions here, why is he the only executive officer charged?  Also, the respondent’s problems may have only just begun as FinCEN can impose a $25,000 fine on the CCO/AML Officer for each failure to file an SAR.

https://www.sec.gov/litigation/admin/2018/34-83252.pdf