US-based watchdog Financial Industry Regulatory Authority (FINRA) has fined BNP Paribas Securities and BNP Paribas Prime Brokerage for lapses in anti-money laundering (AML) and supervisory systems.
The failures involve penny stock deposits and resales, as well as wire transfers, that spanned four years, according to Finra.
As part of the settlement, Finra required both firms to certify within 90 days that their procedures are reasonably designed to achieve compliance in these areas.
Until 2016, BNP’s AML program did not include any surveillance targeting potential suspicious transactions involving penny stocks"
In a statement, FINRA noted that BNP did not put in place a written AML programme for its penny stock business during the aforesaid period.
According to the regulator, the AML programme also lacked proper surveillance to identify suspicious transactions until 2016.
"Until 2016, BNP's AML program did not include any surveillance targeting potential suspicious transactions involving penny stocks, even though BNP accepted the deposit of nearly 31 billion shares of penny stocks, worth hundreds of millions of dollars, from its clients," including from so-called "toxic debt financiers."
BNP processed more than 70,000 wire transfers during the time with a combined worth of more than $230bn. It included over $2.5bn sent in foreign currencies.
Although BNP identified many deficiencies as early as January 2014, it did not fully revise its AML program until March 2017, Finra said.
FINRA senior vice-president and acting head of enforcement Jessica Hopper said: "In order to be effective, a firm's AML programme must be tailored to the firm's business model and types of customer transactions.
"When customers engage in high-risk transactions involving low-priced securities and foreign currencies, the firm must devote sufficient resources to its AML program, including transaction and wire movement monitoring, to ensure that the system is tailored to the business's unique money laundering risks."
BNP agreed to the settlement without accepting or refuting the allegations.