According to FINRA, Intesa Sanpaolo IMI Securities Corp. was censured and fined $650,000 for multiple failures related to anti-money laundering compliance, due diligence of foreign financial institutions, and electronic communications surveillance.

The firm was found in violation of several requirements. First, the firm failed to establish an AML program reasonably designed to detect, monitor, and report suspicious activity relating to low-priced securities transactions. Initially, the firm had no systems to monitor equity trading for suspicious activity. Although it later implemented monitoring systems, these were not reasonably designed to detect red flags typically associated with low-priced securities, such as pump-and-dump schemes. The firm's written AML procedures did not accurately reflect actual monitoring procedures, failed to discuss significant red flags associated with low-priced securities trading, and incorrectly instructed employees to send SARs to a third-party site no longer in use.

Second, the firm failed to timely address AML deficiencies identified in internal audits. Despite audit recommendations to update written procedures and enhance the AML program, and a subsequent audit rating AML risk as "high," the firm failed to implement recommended changes for an extended period. Third, the firm failed to establish due diligence policies and controls for foreign financial institutions (FFIs). The firm did not obtain required information about anticipated trading activity for many FFI customers and did not complete formal risk assessments of FFI customers in high-risk jurisdictions, as repeatedly recommended by internal auditors. The firm failed to implement controls targeted to specific risks posed by FFI accounts and did not periodically review FFI account activity.

Fourth, the firm failed to perform supervisory reviews of electronic communications. The firm's vendor surveillance platform did not capture certain employees' communications due to the firm's failure to enable functions or add employees to the review protocol. The firm had no reconciliation system to ensure all employee communications were reviewed. Investors should understand that comprehensive AML and surveillance programs protect market integrity and investor protection.