SageTrader, LLC
The findings stated that the firm did not tailor its AML program to reasonably monitor for and report suspicious activity in light of the firm’s business model and customer base. The firm’s system for detecting and causing the reporting of suspicious activity was predicated on its review of alerts generated by its automated third-party surveillance system.
The firm’s AML program directed all alerts to one individual compliance officer at the firm. The firm’s AML program relied on the one compliance officer to then determine whether alerts were indicative of suspicious or potentially manipulative activity. If so, the compliance officer would escalate the alerts to the firm’s alert review committee that met weekly, to review the alerts and consider further action.
The compliance officer had no prior AML supervisory experience or training, and the firm’s written AML procedures and training materials did not provide reasonable guidance for determining whether the alerts required follow-up or could be disregarded. The firm failed to provide any guidance for determining whether it should file a Suspicious Activity Report (SAR) based on the alerts.
The firm’s failure to develop a reasonable written AML program resulted in the firm creating a series of unwritten policies for addressing and escalating surveillance alerts. The firm did not typically consider filing a SAR if there were less than three valid alerts involving a single trader that were indicative of a pattern of potentially suspicious or manipulative activity.
This policy, in combination with a series of subsequent policies that the firm created for addressing and escalating surveillance alerts, resulted in the firm failing to reasonably consider whether a particular alert warranted the filing of a SAR.
