According to FINRA, TradeUp Securities, Inc. was censured and fined $700,000, and US Tiger Securities, Inc. was censured and fined $250,000 for failing to develop and implement reasonably designed anti-money laundering programs.

Both New York firms serviced foreign financial institution omnibus accounts that transacted in thinly traded low-priced securities—a business model requiring heightened AML vigilance due to the elevated risk of manipulation and suspicious activity.

US Tiger relied on manual review of daily trade blotters and reports that failed to identify patterns for review of potentially suspicious activity. Exception reports designed to identify wash trades and spoofing generated significant false positives and were not regularly reviewed. The firm also failed to routinely review incoming securities and money movements, creating gaps in detection of suspicious deposits of low-priced securities.

TradeUp similarly relied on inadequate manual blotter reviews that couldn't identify suspicious patterns across accounts or multiple days. Available exception reports generated false positives and couldn't flag escalating buy order patterns. TradeUp developed in-house reports that provided inaccurate information due to coding errors, further hampering detection capabilities.

Both firms also failed to establish adequate due diligence programs for foreign financial institution correspondent accounts. US Tiger incorrectly stated in procedures that it had no such accounts while designating accounts that had received AML warnings from regulators as "low-risk." TradeUp failed to conduct proper due diligence on accounts that included other foreign financial institutions, offshore banks, money service businesses, and politically exposed persons.

Additionally, both firms failed to retain and review business communications on an electronic messaging platform, with automatic deletion removing communications before the required retention period.

This case highlights the critical importance of AML programs tailored to a firm's actual business activities.