Banc of America Investment Services (BAI), a division of Bank of America, consented, without admitting or denying guilt, to $3 million in fines from NASD for failure to gather sufficient information about customers on certain high-risk accounts, an activity required by anti-money laundering regulation.
The failures, according to NASD, occurred with 34 accounts of trust and private investment corporations in the Isle of Man, which belonged to billionaires Sam and Charles Wyly, according to the Wall Street Journal (subscription required).The accounts held from $79 million to $93 million in assets and, because the account holders conducted multi-million-dollar transfers across international borders, should have raised red flags at BAI. But BAI never requested information from the account holders, nor restricted account activity despite the advice of a senior BAI lawyer and despite having anti-money laundering controls in place at the time.
Beyond this, says the NASD in a release, BAI's clearing firm further requested account holder information - requests that were ignored for fear the the billionaire account holders might not appreciate the intrusion of their privacy and would take their business elsewhere.
This fine does not seem to illustrate an industrywide pandemic or failure to institute anti-money laundering controls. What it illustrates is that the banking and brokerages industries are, as much as ever, the domain of hobnobbing bigwigs and corporate fat cats. While some may call it egregious, BAI deserves more than a five-figure slap on the wrist for this blatant perpetuation of the banking boy's club. Cory Levine, Wall Street & Technology