EFG Capital International Corp. – Failure to Supervise – South Florida, including Boca Raton, Lake Worth, Deerfield Beach, Boynton Beach and West Palm Beach, FINRA Arbitration Attorney
EFG Capital International Corp. (CRD #40118, Miami, Florida)
Recently, the Financial Industry Regulatory Authority announced that EFG Capital International Corp. entered into an Acceptance, Waiver and Consent in which the firm was censured, fined $800,000 and required to adopt and implement supervisory systems and written procedures reasonably designed to achieve compliance with the requirements of FINRA Rule 3110. Without admitting or denying the findings, the firm consented to the sanctions and to the entry of findings that it failed to establish and implement an adequate supervisory system, including WSPs, or anti-money laundering (AML) program related to two material areas of its international business model. The findings stated that the firm did not adequately assess, supervise or mitigate the business risks associated with its payment of transaction-based compensation to non-registered individuals or entities, and potentially suspicious outgoing wire transfer activity occurring in accounts of dual customers of the firm and its Swiss bank affiliate. The findings also stated that as part of its international business model, the firm entered into transaction referral agreements under which a foreign individual or entity, called a “foreign introducer,” referred specific transactions to the firm in exchange for a percentage of the firm’s mark-up or commission on the referred transactions. However, the firm’s supervisory system was unreasonable because it failed to assess whether it had sufficient information about the foreign introducer, or its ability to legally satisfy its obligations under an agreement, to conclude that the firm’s payment of transaction-based compensation to the foreign introducer was permissible under U.S. law.