San Diego’s Merrill Lynch whacked

San Diego's Merrill Lynch whacked
San Diego's Merrill Lynch whacked

Securities commission identifies suspicious transactions, halts operations

The mammoth brokerage Merrill Lynch, a unit of Bank of America, was slapped yesterday (December 21) with several charges of money laundering by the Securities and Exchange Commission. The firm was given cease-and-desist orders by the regulator.

The only office that I could find cited in the 11-page report is one in San Diego.

The SEC notes that a registered broker-dealer is required to file a suspicious activity report on a transaction or pattern of transactions of at least $5000 that the broker knows or suspects involves funds from illegal activities, is designed to evade money laundering requirements, and has no business or lawful purpose. In a number of instances, Merrill failed to file such reports, says the SEC.

The firm sent its employees a report on what to look for, among them, “wires originating from jurisdictions which had been flagged in relation to black market peso exchange activities” and “many funds transfers sent in large, round dollar amounts.” Merrill had used a system called “Mantas” for the automated monitoring of retail brokerage accounts “to detect potential money laundering activity,” according to the report. But Merrill failed to use Mantas in two high-risk scenarios, and did not investigate certain Mantas reports.

On page 7 of the SEC’s cease-and-desist order is the headline, “MERRILL LYNCH DID NOT FILE CERTAIN SUSPICIOUS ACTIVITY REPORTS.” Below are these words: “As a result of the deficiencies in the [anti-money laundering] policies and procedures identified above, Merrill Lynch failed to file [suspicious activity reports] on suspicious movement of funds through its accounts. For example, from January 1, 2009, to July 1, 2015, in just one Merrill Lynch branch office in San Diego, Calfiornia, which principally served non-U.S. resident customers, Merrill Lynch failed to file [suspicious activity reports] on numerous suspicious money movements.”

The SEC goes on to say that suspicious accounts at the San Diego branch included “patterns of large currency deposits through [automatic teller machines] where there were no apparent [indications] of business operations,” and “accounts that engaged in complicated movements of large, even-dollar-denominated funds.”

The SEC report does not mention any possibility of drug money laundering through the San Diego branch, or any branch.

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