Sanctuary Wealth’s broker/dealer subsidiary will pay $150,000 to settle FINRA allegations that it fell short when developing and testing an anti-money-laundering (AML) program that complied with federal law.
According to the FINRA settlement released Monday, Sanctuary Securities failed to “develop and implement” an AML program “reasonably designed to achieve compliance” with the requirements in the Bank Secrecy Act, which mandates that b/ds monitor transactions for signs of money laundering.
FINRA argued that between January 2022 and July 2024, Sanctuary Securities had written procedures, including AML guidelines. Still, they weren’t “tailored to the firm’s size, business model and customer base” and didn’t meet the compliance requirements.
Particularly, those procedures didn’t identify potential red flags or give reps “reasonable guidance” on how to detect suspicious activity or how they should review or document one if it arose. According to FINRA, the firm also didn’t guide reps on what kind of reports or other tools it would use to detect suspicious transactions and how those reports would be reviewed.
According to FINRA, these procedures fell short, given the firm’s customer base, mainly domestic retail investors. For example, between April 2022 and 2023, customers made more than 40,000 funds and securities transmittals to and from firm accounts. Still, the firm didn’t have a “reasonable” process for reviewing those transactions for potential AML violations.
Additionally, Sanctuary received reports from its clearing firm at points flagging specific money movements as “potentially suspicious” with a “heightened money laundering risk.” But without the proper procedures, Sanctuary allegedly cleared many of the transfers without documenting whether those transfers raised any red flags.
In one sample, FINRA found Sanctuary cleared more than 90% of about 40 money movements identified as suspect by its clearing firm, including transfers by two accounts owned by seemingly unrelated foreign customers who both made seven-figure wire transfers to the same third-party legal entity that’s domiciled in an unnamed haven renowned for bank secrecy.
Additionally, as part of its BSA requirements, Sanctuary must perform an independent AML test each calendar year. In 2022, it hired a third-party consultant, but the test allegedly failed to address “material aspects” of the AML program, including that the policies and procedures were allegedly only “in draft form” and hadn’t been approved by management.
Representatives from Sanctuary did not return requests for comment prior to publication.
In addition to the $150,000 fine, Sanctuary agreed to a censure and to submit a report in 60 days verifying that AML revisions to reach compliance have been made (though Sanctuary didn’t admit or deny the findings as a part of the settlement).
Sanctuary Securities is the b/d subsidiary of Sanctuary Wealth. The parent firm’s network includes more than 120 partner firms throughout 30 states, with about $50 billion in assets on the platform.
Last year, the firm acquired tru Independence, a Portland, Oregon-based RIA support platform that works with about 30 firms managing $12.5 billion in assets. After the acquisition, tru continued to operate as a separate entity with its own brand and leadership team.