According to FINRA, Mundial Financial Group, LLC was censured, fined $100,000, and required to comply with undertakings for allowing an unregistered person to engage in securities activities and for significant anti-money laundering (AML) program deficiencies.

The firm allowed its indirect owner to engage in securities business activities requiring FINRA registration despite the individual not being registered in any capacity. This indirect owner served as the firm's primary source of new business, soliciting the majority of customers and managing client relationships. The individual presented himself as working for the firm, including using a firm email address to conduct business. Beyond customer acquisition, the indirect owner directed significant aspects of the firm's operations, including decisions about developing or funding new business lines, selecting the clearing firm, and making major personnel decisions such as hiring and setting salaries for key employees. The indirect owner also exercised control over the firm's finances.

Registration requirements exist to ensure that individuals engaging in securities activities meet qualification standards and are subject to regulatory oversight. By allowing an unregistered person to perform these functions, Mundial circumvented these fundamental investor protections.

The firm also maintained a deficient AML compliance program. Mundial failed to establish and implement policies and procedures reasonably designed to detect and cause the reporting of suspicious transactions. While the firm's written procedures included lists of red flags for suspicious activity, they did not address how to detect or investigate those red flags. The procedures failed to identify what alerts or reports the firm would use to identify potential suspicious transactions or how to utilize those tools.

As a result, Mundial failed to detect or reasonably investigate red flags of suspicious activity, including red flags brought directly to its attention by its clearing firm. The firm's AML program also lacked appropriate risk-based policies for identifying and reporting potential insider trading. Although the firm maintained a list of insiders, it implemented no policies or procedures to guide personnel on how to monitor transactions of customers on that list.

Strong AML programs are critical for preventing the securities industry from being used for money laundering, terrorist financing, and other illicit activities. The firm's undertaking should help address these deficiencies.