FinCEN Imposes Record $80 Million Fine on Canaccord Genuity LLC for Alleged BSA Violations Linked to Securities Fraud

By the Constantine Cannon Whistleblower Team 

The U.S, Treasury Department’s Financial Crimes Enforcement Network (FinCEN) imposed an $80 million civil monetary penalty on Canaccord Genuity for willful violations of the Bank Secrecy Act (BSA). The BSA is the primary law for combating money laundering and terrorism financing, designed to protect the financial system from illicit activity. This penalty is the largest ever assessed against a broker-dealer for BSA violations.[1]

How Does FinCEN Help Fight Fraud?

FinCEN is dedicated to utilizing all available resources to combat fraud, protect investors, and safeguard the U.S. financial system. Financial fraud negatively impacts innocent Americans and erodes trust in the economy.[2]

FinCEN Director Andrea Gacki remarked: “Today’s action should be a wake-up call to broker-dealers that willfully fail to comply with their obligations to safeguard the financial system from illicit actors. Consistent with Treasury’s broader efforts to combat fraud and its harmful effects on our financial markets, FinCEN is committed to holding accountable financial institutions of all types—including institutions accessing our world-class capital markets—that willfully ignore their role in preventing and reporting illicit actors who seek to take advantage of hardworking Americans.”[3]

What Were the Alleged Violations?

Canaccord’s extensive compliance shortcomings included allegedly failing to implement and maintain an anti-money laundering (AML) program that complied with the BSA. FinCEN says Canaccord failed to perform adequate risk-based customer due diligence (CDD) and to establish and implement internal controls to monitor transactions for suspicious activities.[4]

The failures prevented Canaccord from detecting and reporting various securities fraud schemes that caused economic harm to investors. Additionally, Canaccord allegedly onboarded high-risk customers with reported connections to bad actors. The firm purportedly failed to file at least 160 suspicious activity reports (SARs) related to various over-the-counter securities, involving a high volume of suspicious transactions estimated by FinCEN to be in the thousands. This deprived law enforcement of timely and essential financial information regarding suspicious activities.[5]

In resolving the matter, Canaccord acknowledged that it willfully violated the BSA by failing to: (i) develop, implement, and maintain an effective AML Program; (ii) perform the required due diligence on correspondent accounts for foreign financial institutions; and (iii) file required SARs.

The Importance of BSA and AML Compliance

Strong AML programs can help prevent financial institutions from being used to facilitate fraud,  money laundering, and other illicit activity. Effective AML programs must identify risks associated with the nature and volume of the institution’s financial products and services, including fraud-related risks in the securities markets.

Broker-dealers, especially those acting as market makers, must comply with the BSA by implementing effective policies and controls to identify and report suspicious activities, such as penny stock scams. Canaccord, as a market maker, allegedly failed to adequately resource its AML program, which was not aligned with the risks of its business model. This led to an inability to detect and report suspicious transactions due to insufficient, inexperienced staff overwhelmed by transaction volumes.[6]

Financial institutions subject to FinCEN’s 2016 CDD Rule, including broker-dealers, must conduct meaningful risk-based customer due diligence  both during onboarding and throughout the customer relationship. Canaccord’s CDD failures allegedly allowed high-risk customers with ties to illicit activities to access the U.S. financial system without proper oversight. These included a customer fined by the SEC for microcap fraud, a customer aiding Russian oligarchs, and a customer linked to a Venezuelan individual under investigation by the Treasury’s Office of Foreign Assets Control.[7]

How Should Financial Institutions Respond to Alleged Deficiencies?

Constantine Cannon partner Marlene Koury commented: “This enforcement action sends a clear signal that financial institutions must treat AML compliance as a core operational obligation. When regulators identify weaknesses in monitoring and reporting systems, firms must move quickly to fix them. Delayed remediation allows suspicious activity to continue unchecked and undermines the integrity of the U.S. financial system. This action highlights the need for financial institutions to promptly address deficiencies found in regulatory examinations.”

Canaccord’s regulator previously identified weaknesses in the firm’s AML program, particularly in monitoring suspicious transactions. Despite written commitments to address these issues, Canaccord allegedly delayed meaningful remediation until FinCEN began its investigation. Firms should promptly resolve reporting issues to ensure timely and accurate suspicious activity reporting.

What is FinCEN’s AML/Sanctions Whistleblower Program?

While it is unknown whether whistleblowers were involved in initiating this enforcement action, FinCEN stresses the importance of its whistleblower incentive program. FinCEN’s AML/Sanctions Whistleblower Program offers rewards for reporting money laundering violations under the BSA and sanctions breaches under laws prohibiting business with sanctioned entities.[8] Successful whistleblowers can earn up to 30% of the government’s recovery from any enforcement action. Recently, FinCEN created a dedicated whistleblower webpage for reporting such violations. Learn more about this update in our blog post here.

Our Firm Represents AML/Sanctions Whistleblowers

If you have information regarding potential AML and sanctions violations, please contact us. Our firm has significant experience representing whistleblowers under the FinCEN AML/Sanctions Whistleblower Program. We will connect you with a member of our whistleblower team for a free and confidential consultation.

Speak Confidentially With Our Whistleblower Attorneys

Sources:

[1] See https://www.fincen.gov/news/news-releases/fincen-assesses-historic-80-million-penalty-against-canaccord-genuity-llc

[2] See https://www.fincen.gov/

[3] Id.

[4] Id.

[5] Id.

[6] Id.

[7] Id.

[8] See https://www.fincen.gov/whistleblower-program

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