The Financial Industry Regulatory Authority (FINRA) said last week that it has fined U.S. Bancorp Investments, Inc. (USBI) $500,000 and issued a censure after the firm failed to file dozens of required Suspicious Activity Reports (SARs) over a three-year period.
Between April 2020 and August 2023, USBI reportedly did not submit 42 SARs because it applied an incorrect monetary threshold when assessing suspicious transactions.
The firm used the $25,000 reporting threshold applicable to banks instead of the $5,000 threshold required for broker-dealers.
FINRA added that as a result, activity involving account intrusions, identity theft and internet scams went unreported.
The regulator said the error reflected shortcomings in USBI’s anti-money laundering policies and procedures, in violation of its rules.
Broker-dealers must have systems capable of detecting and reporting transactions that meet the $5,000 threshold, whereas banks operate under a higher limit in some cases.
The problem is said to have stemmed from a centralised compliance process across USBI and its banking affiliate, which led to the misapplication of the bank standard to brokerage accounts.
USBI discovered the mistake in August 2023 after reviewing a separate FINRA enforcement action.
The firm then undertook remedial steps, including a six-year review of its reporting practices, retroactively filing the missing SARs, and updating internal procedures and staff training.
FINRA noted USBI’s cooperation and prompt self-reporting in determining sanctions. The firm agreed to settle without admitting or denying the findings.