First Criminal Charge of U.S. Broker-Dealer for Bank Secrecy Act Violation Highlights Importance of Anti-Money-Laundering Controls

On December 19, 2019, federal prosecutors in the Southern District of New York announced the first-ever criminal charge against a U.S. broker-dealer for a Bank Secrecy Act (BSA) violation. The charge against Central States Capital Markets, LLC (CSCM), which the government agreed to dismiss upon completion of a deferred prosecution agreement, stems from serious gaps in CSCM’s anti-money laundering (AML) compliance program: CSCM failed to follow its own customer due diligence procedures, ignored known red flags when opening accounts and failed to adequately employ its monitoring system to capture and report suspicious transactions.