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HOUSE_OVERSIGHT_024129

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As part of the Order, the Bank is required to arrange for an independent look back for suspicious activity covering areas (and presumably time frames) to be designated by the bank’s Examiner-in-Charge. e Broker-Dealers: o E*TRADE: In January 2009, FINRA assessed a $1 million penalty against E*Trade Securities and E* Trade Clearing LLC for failure to implement AML policies and procedures to reasonably detect and report potentially suspicious securities transactions. Alerts triggered in the automated monitoring system were limited to those with money movements, thereby eliminating detection and review of potentially suspicious matched or washed trades. The firms relied upon analysts to monitor high-volume online trading activity for potentially suspicious activity manually, without providing necessary automated monitoring tools. Additionally, in July 2008, both firms reached a $1 million settlement with the SEC for failure to document their Customer Identification Program (CIP) and verify the identities of more than 65,000 clients from October 2003 to June 2005. e Money Services Businesses (MSBs): © Sigue Corporation: In January 2008, FinCEN assessed a $12 million CMP on Sigue Corporation for failure to implement an effective AML Compliance Program in all four core elements as defined in the USA PATRIOT Act: internal controls, designation of compliance officer/personnel, training, and independent testing. The U.S. Department of Justice assessed a $15 million forfeiture and entered into a Deferred Prosecution Agreement (DPA). Payment of the forfeiture satisfied the FinCEN penalty. Specific findings included the following: = Lack of defined roles and responsibilities of the compliance function « Failure to implement a risk-based suspicious activity monitoring program commensurate with dollar volume and geographic reach = Lack of effective supervision and control over agents (e.g., agents advising customers to structure transactions to evade AML reporting require

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