First Broker-Dealer Charged with Violating the Bank Secrecy Act

Dec 24, 2018 | Banks & Credit Unions, Litigation, News

The U.S. Attorney for the Southern District of New York, Geoffrey Berman, has filed a criminal charge against Central States Capital Markets (CSCM), alleging that the broker-dealer violated the Bank Secrecy when it failed to report suspicious activities when working with Scott Tucker.

A letter from the attorney’s office states, “CSCM willfully failed to file a Suspicious Activity Report (SAR) concerning transactions involving Scott Tucker, a client, despite knowing,
suspecting, or having reason to suspect that Tucker was using CSCM to launder proceeds” from his illegal businesses.

According to Berman, CSCM is the first broker-dealer to be charged with a criminal violation of the Bank Secrecy Act. “Today’s charge makes clear that all actors governed by the Bank Secrecy Act — not only banks — must uphold their obligations to protect our economy from exploitation by fraudsters and thieves,” said Berman.

In a deferred prosecution agreement, CSCM agreed to pay a $400,000 penalty and improve its anti-money laundering compliance program. In return, the attorney’s office would defer prosecution for two years, and would then would seek to dismiss all charges if CSCM abides by the agreement.

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