According to FINRA, Sonenshine & Company LLC was censured and fined $20,000 for failing to establish adequate anti-money laundering (AML) compliance procedures, particularly regarding responses to Financial Crimes Enforcement Network (FinCEN) requests.

The New York firm's written AML procedures failed to provide any guidance on how to search firm records in response to FinCEN requests, known as 314(a) requests. These requests help law enforcement identify accounts and transactions associated with terrorism and money laundering. The procedures also established no process for monitoring whether the firm timely reviewed and responded to these requests.

The compliance failures were not new issues—FINRA had warned the firm about these deficiencies back in 2017. Despite this warning, the firm did not review or respond to any FinCEN requests from March 2021 through August 2021. The firm only became aware of these failures when FINRA identified them in 2021.

Additionally, the firm failed to conduct annual independent testing of its AML compliance program. Again, FINRA had warned the firm about this requirement in 2017. Despite this, the firm's written procedures only required testing every two years until December 2023, and the firm failed to conduct any AML testing in at least 2020 and 2022.

AML compliance is a fundamental obligation for all financial institutions. These programs help prevent the financial system from being used for money laundering, terrorist financing, and other illicit purposes. When firms fail to respond to law enforcement information requests, they potentially allow suspicious activity to continue undetected.

For investors, while AML compliance may seem like a back-office function, it reflects a firm's overall commitment to regulatory compliance and ethical operations. Repeated failures to address known deficiencies raise broader questions about a firm's compliance culture.