FINRA Fines Morgan Stanley $5.5 Million for AML Violations
- The bank did not comply with the AML-rules for over 5 years and ignored warnings by its own system.

According to FINRA, Morgan Stanley failed to follow three major requirements of the Bank Secrecy Act. The agency detailed that though the Wall Street giant automated its AML surveillance system, it did not receive critical data from several systems, which undermined the firm’s surveillance of tens of billions of dollars of wire and foreign currency transfers, including transfers to and from countries known for having a high money-laundering risk.
In addition, Morgan Stanley did not keep enough resources to review alerts generated by its automated AML surveillance system. Moreover, the firm was also accused of ignoring the alerts without investigating the suspicious wire transfers. The bank didn’t even monitor customers’ deposits and trades in penny stocks for potentially suspicious activity. According to the agency, Morgan Stanley’s customers deposited approximately 2.7 billion shares of penny stock, which resulted in subsequent sales totaling approximately $164 million during that period.
Mandatory AML Rules
Commenting on this violation, Susan Schroeder, Executive Vice President at FINRA, said: “As we stated in our Report on FINRA Examination Findings released earlier this month, FINRA continues to find problems with the adequacy of some firms’ overall AML programs, including allocation of AML monitoring responsibilities, data integrity in AML automated surveillance systems, and firm resources for AML programs.”
The agency also found that although Morgan Stanley divided responsibility for vetting its customers’ deposits and sales of penny stock among its branch management and two home office departments, it didn’t establish a coordination system among them.
Tightening Rules
Last August, FINRA slapped Interactive Brokers with a fine of $5.5 million for violating SEC regulations, in addition to supervisory failures. A month later, the agency extended its reach towards the controversial ICOs in the US market and charged a Blockchain Blockchain Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned.) In this sense, blockchain is immune to the manipulation of data making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tamper with. The Evolution of BlockchainBlockchain was originally invented by an individual or group of people under the name of Satoshi Nakamoto in 2008. The purpose of blockchain was originally to serve as the public transaction ledger of Bitcoin, the world’s first cryptocurrency.In particular, bundles of transaction data, called “blocks”, are added to the ledger in a chronological fashion, forming a “chain.” These blocks include things like date, time, dollar amount, and (in some cases) the public addresses of the sender and the receiver.The computers responsible for upholding a blockchain network are called “nodes.” These nodes carry out the duties necessary to confirm the transactions and add them to the ledger. In exchange for their work, the nodes receive rewards in the form of crypto tokens.By storing data via a peer-to-peer network (P2P), blockchain controls for a wide range of risks that are traditionally inherent with data being held centrally.Of note, P2P blockchain networks lack centralized points of vulnerability. Consequently, hackers cannot exploit these networks via normalized means nor does the network possess a central failure point.In order to hack or alter a blockchain’s ledger, more than half of the nodes must be compromised. Looking ahead, blockchain technology is an area of extensive research across multiple industries, including financial services and payments, among others. Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned.) In this sense, blockchain is immune to the manipulation of data making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tamper with. The Evolution of BlockchainBlockchain was originally invented by an individual or group of people under the name of Satoshi Nakamoto in 2008. The purpose of blockchain was originally to serve as the public transaction ledger of Bitcoin, the world’s first cryptocurrency.In particular, bundles of transaction data, called “blocks”, are added to the ledger in a chronological fashion, forming a “chain.” These blocks include things like date, time, dollar amount, and (in some cases) the public addresses of the sender and the receiver.The computers responsible for upholding a blockchain network are called “nodes.” These nodes carry out the duties necessary to confirm the transactions and add them to the ledger. In exchange for their work, the nodes receive rewards in the form of crypto tokens.By storing data via a peer-to-peer network (P2P), blockchain controls for a wide range of risks that are traditionally inherent with data being held centrally.Of note, P2P blockchain networks lack centralized points of vulnerability. Consequently, hackers cannot exploit these networks via normalized means nor does the network possess a central failure point.In order to hack or alter a blockchain’s ledger, more than half of the nodes must be compromised. Looking ahead, blockchain technology is an area of extensive research across multiple industries, including financial services and payments, among others. Read this Term firm for selling a coin called HempCoin.
With the increasing suspicious activities in the market, FINRA also strengthened the process of background checks for broker hires and announced the election of three governors to its board in mid-2018.
“Firms must ensure that their AML programs are reasonably designed to detect and cause the reporting of potentially suspicious activity,” Schroeder added.
According to FINRA, Morgan Stanley failed to follow three major requirements of the Bank Secrecy Act. The agency detailed that though the Wall Street giant automated its AML surveillance system, it did not receive critical data from several systems, which undermined the firm’s surveillance of tens of billions of dollars of wire and foreign currency transfers, including transfers to and from countries known for having a high money-laundering risk.
In addition, Morgan Stanley did not keep enough resources to review alerts generated by its automated AML surveillance system. Moreover, the firm was also accused of ignoring the alerts without investigating the suspicious wire transfers. The bank didn’t even monitor customers’ deposits and trades in penny stocks for potentially suspicious activity. According to the agency, Morgan Stanley’s customers deposited approximately 2.7 billion shares of penny stock, which resulted in subsequent sales totaling approximately $164 million during that period.
Mandatory AML Rules
Commenting on this violation, Susan Schroeder, Executive Vice President at FINRA, said: “As we stated in our Report on FINRA Examination Findings released earlier this month, FINRA continues to find problems with the adequacy of some firms’ overall AML programs, including allocation of AML monitoring responsibilities, data integrity in AML automated surveillance systems, and firm resources for AML programs.”
The agency also found that although Morgan Stanley divided responsibility for vetting its customers’ deposits and sales of penny stock among its branch management and two home office departments, it didn’t establish a coordination system among them.
Tightening Rules
Last August, FINRA slapped Interactive Brokers with a fine of $5.5 million for violating SEC regulations, in addition to supervisory failures. A month later, the agency extended its reach towards the controversial ICOs in the US market and charged a Blockchain Blockchain Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned.) In this sense, blockchain is immune to the manipulation of data making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tamper with. The Evolution of BlockchainBlockchain was originally invented by an individual or group of people under the name of Satoshi Nakamoto in 2008. The purpose of blockchain was originally to serve as the public transaction ledger of Bitcoin, the world’s first cryptocurrency.In particular, bundles of transaction data, called “blocks”, are added to the ledger in a chronological fashion, forming a “chain.” These blocks include things like date, time, dollar amount, and (in some cases) the public addresses of the sender and the receiver.The computers responsible for upholding a blockchain network are called “nodes.” These nodes carry out the duties necessary to confirm the transactions and add them to the ledger. In exchange for their work, the nodes receive rewards in the form of crypto tokens.By storing data via a peer-to-peer network (P2P), blockchain controls for a wide range of risks that are traditionally inherent with data being held centrally.Of note, P2P blockchain networks lack centralized points of vulnerability. Consequently, hackers cannot exploit these networks via normalized means nor does the network possess a central failure point.In order to hack or alter a blockchain’s ledger, more than half of the nodes must be compromised. Looking ahead, blockchain technology is an area of extensive research across multiple industries, including financial services and payments, among others. Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned.) In this sense, blockchain is immune to the manipulation of data making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tamper with. The Evolution of BlockchainBlockchain was originally invented by an individual or group of people under the name of Satoshi Nakamoto in 2008. The purpose of blockchain was originally to serve as the public transaction ledger of Bitcoin, the world’s first cryptocurrency.In particular, bundles of transaction data, called “blocks”, are added to the ledger in a chronological fashion, forming a “chain.” These blocks include things like date, time, dollar amount, and (in some cases) the public addresses of the sender and the receiver.The computers responsible for upholding a blockchain network are called “nodes.” These nodes carry out the duties necessary to confirm the transactions and add them to the ledger. In exchange for their work, the nodes receive rewards in the form of crypto tokens.By storing data via a peer-to-peer network (P2P), blockchain controls for a wide range of risks that are traditionally inherent with data being held centrally.Of note, P2P blockchain networks lack centralized points of vulnerability. Consequently, hackers cannot exploit these networks via normalized means nor does the network possess a central failure point.In order to hack or alter a blockchain’s ledger, more than half of the nodes must be compromised. Looking ahead, blockchain technology is an area of extensive research across multiple industries, including financial services and payments, among others. Read this Term firm for selling a coin called HempCoin.
With the increasing suspicious activities in the market, FINRA also strengthened the process of background checks for broker hires and announced the election of three governors to its board in mid-2018.
“Firms must ensure that their AML programs are reasonably designed to detect and cause the reporting of potentially suspicious activity,” Schroeder added.