Merrill Lynch, Pierce, Fenner & Smith Incorporated has resolved SEC charges tied to repeated failures to submit suspicious activity reports (SAR) between April 2020 and September 2024.
The US regulator said the broker-dealer did not meet reporting and recordkeeping obligations and agreed to a $7.5m civil penalty.
Go deeper with GlobalData
Access deeper industry intelligence
Experience unmatched clarity with a single platform that combines unique data, AI, and human expertise.
In its order, the SEC said Merrill used Bank of America Corporation’s group-wide Bank Secrecy Act/Anti-Money Laundering programme as part of its own SAR compliance process.
In a statement to Private Banker International, the bank said: “We maintain rigorous anti-money laundering practices. As we have said previously, we have been engaged with regulators on this matter, and we continually review and enhance our AML systems to address evolving risks and report and detect suspicious activity.”
The order said Bank of America operated transaction-monitoring software that bundled potentially suspicious activity into “event groups” and gave those groups risk scores.
The SEC said only groups scoring above a set threshold were reviewed for possible SAR submissions, even though internal analysis had shown, from at least April 2020, that some lower-scoring groups would have led to SAR filings if they had been examined.
According to the order, Merrill did not review those lower-scoring event groups during the period in question and, as a result, numerous SARs were not filed.
Without admitting the findings, Merrill accepted a cease-and-desist order, a censure and the $7.5m penalty.
The investigation was carried out by Nicholas Flath and overseen by Rebecca Reilly and Thomas P. Smith, Jr., from the SEC’s New York Regional Office.
