According to FINRA, Tigress Financial Partners, LLC has been censured and fined $100,000 for failing to develop and implement an AML program reasonably designed to detect and report suspicious transactions given its new business line.

The firm onboarded hundreds of new customers domiciled in high-risk foreign jurisdictions. While the firm's written supervisory procedures stated it would monitor for suspicious activity using exception reports and account activity review, the procedures did not include reasonable guidance on what reports should be reviewed, how to detect patterns of unusual activity, or how to investigate and document investigations of red flags.

The firm relied on a periodic manual review of hard copy blotters to detect red flags. This manual process required line-by-line evaluation without sorting, risk ranking, automation, or other tools to identify trends or potentially suspicious patterns. This practice was unreasonable given the firm's customer base and transaction volume.

The firm's customer due diligence procedures were also deficient. The procedures did not reasonably identify what risk factors would subject customers to additional due diligence, and only politically exposed persons were designated as high risk. The firm did not reasonably develop risk profiles for customers utilizing shell companies, customers under FBI investigation, or customers transacting with counterparties in high-risk jurisdictions.

The firm also failed to disclose mark-ups and mark-downs on customer confirmations for corporate debt transactions.

This case demonstrates how a firm's AML program must evolve with its business. When Tigress expanded into a new business line with high-risk foreign customers, its existing manual processes became inadequate. Investors dealing with firms that serve international clients should expect those firms to have robust, automated systems for detecting suspicious activity.