FOLLOW US

A Miami-based brokerage, EFG Capital International, has agreed to pay $650,000 to settle Financial Industry Regulatory Authority (FINRA) allegations that the firm’s anti-money laundering (AML) systems failed to flag suspicious transactions and overlooked key compliance steps.

In a Thursday settlement letter, FINRA announced that EFG Capital was fined and censured for compliance deficiencies tied to its automated monitoring systems — issues uncovered during a recent regulatory exam. While the firm neither admitted nor denied the findings, EFG agreed to the sanctions and has since remediated its AML practices, according to the settlement notice.

FINRA Flags $305 Million in Unmonitored Wire Transfers

EFG Capital, a FINRA member since 1996 with about 120 representatives across six U.S. branches and a Swiss banking affiliate, came under scrutiny for system flaws that spanned May 2018 through August 2022.

Between May 2018 and November 2021, FINRA alleged, delays in data transmissions between EFG and its Swiss affiliate caused the firm’s AML tool to miss critical wire activity. As a result, the system’s daily monitoring failed to review roughly 900 wire transfers — totaling $305 million — including transfers to and from high-risk countries, according to the regulator.

The problem didn’t stop there. FINRA said a coding error in the automated AML system misclassified wire transfers from high-risk jurisdictions as domestic U.S. transfers by defaulting their country codes to “U.S.”. This glitch effectively cloaked $30 million in wire activity that should have triggered review and compliance alerts.

Oversights and Failures in Compliance Procedures

Beyond system flaws, FINRA claimed EFG also fell short in its periodic account reviews and failed to investigate rejected wire transfers flagged by other financial institutions for compliance reasons.

The organization emphasized that these issues echoed earlier AML weaknesses — notably, a 2018 settlement in which EFG faced claims it failed to properly review wire activities of clients whose accounts were held by its Swiss affiliate.

EFG Says Case Resolves ‘Legacy Issues’

Responding to the enforcement action, an EFG spokesperson said the company was “pleased to have resolved this matter,” stressing that the settlement “fully resolves legacy issues identified in 2021 and 2022 related to certain AML policies, procedures, and systems.”

The representative added that the resolution will not have a material financial impact and reflects EFG’s cooperation and remediation efforts throughout FINRA’s investigation.