SEC Wallops Merrill With $13M AML Fine

Merrill also did not apply its Mantas automated transaction monitoring system to certain accounts from approximately 2006 through approximately May 2015.

These accounts included:

• Retirement accounts — about 4.2 million SEP, 403(b), IRA, IRA rollover, Roth IRA and other retirement accounts as of February 2015;
• Managed accounts — about 228,0001 retail brokerage accounts held at Merrill Lynch as of February 2015 under the discretionary management of a Merrill Lynch registered representative or Merrill Lynch-approved outside investment adviser; and
• Securities-based loan accounts — about 421,000 active retail brokerage accounts as of February 2015 that held securities-based loans, and brokerage accounts pledged as security for those loans.

According to the complaint, these accounts “engaged in a significant number of transactions, moving substantial amounts of funds to and from accounts at Merrill Lynch. From 2011 through 2013, managed accounts, securities-based loan accounts, and the accounts pledged to them engaged in approximately 12 million transactions moving approximately $105 billion to and from accounts at Merrill Lynch, via checks, ATM withdrawals, cash deposits, wires and ACH transactions.”

The complaint also cites Merrill for failing to file suspicious activity reports, which broker-dealers are required to file as set out by the Financial Crimes Enforcement Network, or FinCEN. 

Merrill Lynch said in a statement that “We continuously work to enhance and strengthen our controls. These matters are from several years ago and all the concerns raised have been fully addressed.”