According to FINRA, Banyan Securities, LLC has been censured and fined $15,000 for significant failures in its anti-money laundering (AML) compliance program.

The firm was found in violation of federal regulations requiring independent testing of AML programs. Specifically, Banyan Securities failed to conduct any independent testing of its AML program from at least 2018 through the present—a period spanning approximately seven years. Additionally, the firm's written AML program did not include any procedures providing for independent testing for compliance from February 2022 through the present.

Anti-money laundering programs are a critical component of financial industry regulation. The Bank Secrecy Act requires broker-dealers to establish and implement AML programs that include, among other things, independent testing for compliance. This testing must be conducted by member firm personnel or by a qualified outside party on at least an annual basis.

As part of the settlement, Banyan Securities is required to certify in writing that it has conducted an independent test and revised its written AML program to require independent AML testing each calendar year.

What Investors Can Learn: This case highlights the importance of regulatory compliance infrastructure at brokerage firms. Investors should be aware that AML programs exist to protect them and the financial system from illicit activities, including fraud and money laundering. When choosing a broker-dealer, investors may want to inquire about the firm's compliance history and whether it maintains robust internal controls.