SEC Settles With Canadian Broker Over Alleged AML Failures

SEC Settles With Canadian Broker Over Alleged AML Failures The SEC claimed Haywood USA failed to file required suspicious activity reports and didn't investigate red flags tied to accounts involving a convicted criminal and a banker. A Canadian-based broker/dealer operating in the U.S. will pay $750,000 to settle Securities and Exchange Commission claims that its anti-money laundering oversight fell short. Specifically, in an order dated Sept. 11, the SEC alleged that between May 2021 and January 2026, Haywood USA (a wholly-owned subsidiary of the Canada-based Haywood Securities) failed to file certain suspicious activity reports with the U.S. Treasury’s Financial Crimes Enforcement Network, as spelled out in its written policies. In some instances, the firm identified information when opening accounts, during client due diligence or at other points, indicating that certain accounts “presented red flags for potentially suspicious activity,” but the firm failed to identify or investigate them to determine whether it needed to notify FinCEN, according to the commission. In one case, Haywood allegedly opened an account for an unnamed business that was having difficulty doing so at another b/d when it learned that an unnamed convicted criminal was an original member and one of its beneficial owners via a trust he created and funded (the business and individual in question aren’t named). In one case, compliance personnel at the firm allegedly found that one of the trustees had been subpoenaed prior to the account opening concerning the trustee’s work on behalf of the unnamed criminal. They also found information indicating that the business was “a possible vehicle for routing or hiding” assets, with the trust acting as a “possible conduit for illicit payments,” according to the order. The SEC alleged that the firm knew the purpose of opening this account was to deposit several hundred million dollars in shares from a single issuer and to immediately liquidate them (which it proceeded to do after the account was opened). Over a year later, Haywood purportedly faced a criminal subpoena from U.S. authorities related to the ordeal. In another case, Haywood was allegedly in the midst of an account opening for an unnamed British Virgin Islands company owned by a trust that had been established for the children of an individual who’d recently resigned his position as the head of a bank in his home country in the midst of an ongoing fraud investigation. According to the SEC, Haywood learned that the business and trust had been created in nine days, with a series of transactions and transfers from the resigned banker to a relative, and from them to the trust. The firm also purportedly learned the securities in the account were primarily from microcap companies the banker had been involved in as a co-founder, director or affiliate. Haywood allegedly flagged the company as a high-risk account, but failed to monitor it for suspicious activity (shortly after opening the account, the unnamed banker was arrested). According to the SEC, in the wake of these and other instances, Haywood had taken several positive steps, including revising its AML policies, increasing its compliance staffing and hiring a third-party consultant to bolster annual reviews and testing of its AML compliance program. The firm did not respond to a request for comment as of press time.