According to FINRA, Wells Fargo Advisors Financial Network, LLC and Wells Fargo Clearing Services, LLC were censured and fined $2,250,000 jointly and severally for failing to store customer identification program (CIP) records in the required non-erasable and non-writable "write once, read many" (WORM) format.

The firms were found in violation of anti-money laundering (AML) recordkeeping requirements. Firm personnel discovered that approximately 13 million CIP-related records, pertaining to approximately 8.2 million customers, were stored on a system that was not WORM-compliant. Despite discovering this issue, the firms failed to escalate it to the working group that considered FINRA reporting obligations, did not report it to FINRA, and did not remediate the issue for more than three years. During this period, approximately 4 million additional documents were stored on the non-compliant platform after the firms knew about the problem.

Customer identification programs are a critical component of AML compliance, helping financial institutions verify the identity of customers and detect potentially suspicious activity. The WORM format requirement exists to ensure the integrity of these records by preventing alteration or deletion, which is essential for regulatory examinations and investigations. The firms' failure to use WORM-compliant storage meant that these important records could potentially be modified or erased, undermining their reliability.

Additionally, the firms failed to notify FINRA at least 90 days prior to using the non-WORM compliant platform, as required by regulations. Investors should understand that robust AML programs protect the integrity of the financial system and help prevent criminals from using brokerage accounts for illicit purposes. This case demonstrates the importance of firms maintaining proper recordkeeping systems and promptly addressing compliance deficiencies when discovered.