FINRA Fines American Portfolios Financial Services $225,000 for AML and Supervisory Failures

The Financial Industry Regulatory Authority (FINRA) has fined American Portfolios Financial Services, Inc. $225,000 for significant lapses in its Anti-Money Laundering (AML) compliance and supervisory systems between January 2019 and August 2022.

American Portfolios opened accounts for customers engaging in high-risk transactions with low-priced securities, where over 48 million shares were deposited and over 42 million shares were liquidated, generating nearly $17 million in proceeds. Despite these risks, the firm failed to implement adequate policies to detect and report suspicious activities, as required under FINRA rules.

A key example cited by FINRA involved a customer who deposited and liquidated 330,000 shares in a single day during a promotional campaign, raising several red flags that the firm failed to investigate. Additionally, the firms supervisory procedures were inadequate, relying on incomplete documentation to determine the legality of transactions.

In addition to the fine, American Portfolios has accepted a censure as part of the settlement, highlighting the critical need for strong compliance and oversight in financial institutions.