Merrill Lynch Fined $26 Million for Alleged Failure to Sufficiently Monitor and Report Suspicious Transactions

merrill lynch SEC compliance software beam machine learning

In late December 2017, the Securities and Exchange Commission and the Financial Industry Regulatory Authority fined Merrill Lynch a combined total of $26 million for alleged failures in reporting suspicious transactions. According to Reuters, one source explained that Merrill Lynch allegedly offered its brokerage clients traditional banking services without utilizing a screening software, such as Beam, to find and highlight high risk clients and potential illegal activity. The banking services allegedly offered included cash deposits at ATMs and wire transfers to offshore firms.

At the time of the alleged violation, Merrill Lynch was apparently using a legacy product that requires heavy customization typically performed by an outside consulting firm. This means that once it is implemented, it is difficult to adapt systems to the ever-changing compliance space without incurring substantial additional cost. It is not practical to continually pay consulting firms to tinker with legacy software.

Beam’s integration is built to be flexible and is designed so that customers will not need an army of consultants to keep it current.

Securities Exchange Commission Report