BNP Paribas Fined $15 Million over Penny Stocks Transactions

Although BNP transacted over 70,000 wire transfers worth $233 billion, it relied on only one investigator to review AML alerts.

BNP Paribas Securities and BNP Paribas Prime Brokerage have agreed to pay a $15 million fine to settle the US regulators’ probe into the firm’s compliance with anti-money laundering rules involving penny stock deposits and resales, and wire transfers.

FINRA said Thursday BNP Paribas had failed to detect and coordinate the supervision of suspicious transactions within its AML program from February 2013 to March 2017.

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BNP Paribas’s surveillance system hadn’t received critical data from several systems that would have helped it detect tens of billions of dollars of wire and foreign currency transfers from high-risk money-laundering countries, FINRA said.

The independent watchdog alleged the company hadn’t implemented procedures and controls that would have ensured periodic reviews of accounts from certain foreign financial institutions, including from so-called “toxic debt financiers.”

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Moreover, FINRA said the company didn’t sufficiently monitor customers’ deposits and trades in penny stocks for potentially suspicious activity despite heavy activity, resulting in 31 billion shares of penny stock deposited with subsequent sales worth hundreds of millions of dollars.

During the same period, BNP processed more than 70,000 wire transfers with a total value of over $230 billion, including more than $2.5 billion sent in foreign currencies.

One employee oversaw $233 billion wire transfers

The Paris-based lender had discovered some of the deficiencies in its automated surveillance system in January 2014, but it did not revise its AML program until March 2017.

“As a result, BNP did not identify “red flags” indicative of—or review—potentially suspicious activity involving the deposit and sales of penny stocks or foreign wire transfers that may have required the filing of a suspicious activity report,” the FINRA said.

In addition to those AML concerns, the regulator also found that BNP did not effectively train enough employees to check compliance issues in transactions of those low-priced securities. For example, although its two subsidiaries transacted over 70,000 wire transfers worth nearly $233 billion, the bank relied on only one investigator to review alerts relating to wires originating from BNP’s brokerage accounts. FINRA claims that these failures persisted over a two-year period.

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