Regulators target lax TC trade surveillance after years of missed suspicious activity reports filings
Canaccord just set a record no broker‑dealer wants: the largest Bank Secrecy Act penalty in US history.
The US Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) imposed a record‑setting US$80m civil money penalty on Canaccord Genuity LLC for “willful violations” of the Bank Secrecy Act.
Regulators describe it as the largest BSA penalty yet against a broker‑dealer.
FinCEN said the firm failed to meet core anti‑money laundering (AML) and counter‑terrorist financing obligations, and missed at least 160 suspicious activity reports (SARs) tied to thousands of OTC securities transactions.
In a parallel case, the US Securities and Exchange Commission (SEC) issued an administrative order finding that from February 2019 to March 2022 Canaccord lacked an AML surveillance program “reasonably designed to detect, investigate, and report suspicious activity” in its equity trading business.
The SEC order said the firm “failed to file approximately 150 SARs” related to its equity trading during this period and concluded that Canaccord “willfully” violated Section 17(a) of the Securities Exchange Act and Rule 17a‑8.
The SEC ordered a US$20m civil money penalty, a cease‑and‑desist order, and a censure.
Both actions centre on Canaccord’s heavy footprint in low‑priced OTC securities.
The SEC order noted that during the relevant period the firm acted as a market maker and executing broker in exchange‑listed and OTC securities and “annually rank[ed] among the top four market participants by notional value of trades executed in OTC securities priced under $5 per share.”
The order also said that in 2022 Canaccord executed about 10.4 million trades in OTC securities.
According to the SEC, Canaccord’s AML framework relied heavily on internal exception reports meant to flag “patterns of potential market manipulation” in its equity trading activity.
These included reports for “Marking the Close,” “Marking the Open,” “Pump and Dump,” “Excessive Cancels,” “Wash Sales,” “Low Price,” and “Low Volume.”
The SEC found that some reports were deficient and others went unreviewed for months or years, leaving large gaps in surveillance.
The SEC order said the Low Volume report for the market‑making business “went completely unreviewed from June 2019 through March 2022,” even though it was supposed to capture cases where the firm’s trading represented a significant share of market volume in low‑volume securities.
It added that thousands of trades identified by this report went uninvestigated during that 34‑month stretch.
The SEC also found that, in market‑making, Canaccord did not review the Low Price report from May 2019 to December 2021.
It did not review the Marking the Open and Marking the Close reports for seven months in 2021, and it did not review the Pump and Dump report in September 2019 and May 2020.
For the institutional business, the SEC said the Low Price report went unreviewed for at least 20 months between February 2019 and December 2021, and the Low Volume report went unreviewed from December 2021 through March 2022.
Reuters reported that investigators also found two compliance employees falsified records to make it appear that Canaccord was reviewing trade surveillance reports.
FinCEN cited suspicious activity involving an account for a Cyprus‑based firm that spent years helping Russian oligarchs move money out of Russia.
FinCEN Director Andrea Gacki said, “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.”
FinCEN framed the case as part of broader efforts to combat fraud and protect US financial markets.
For wealth managers, the scale of the business behind the enforcement is notable.
Reuters reported that the Toronto‑based firm ended 2025 with $144.8bn of client assets in its global wealth management unit and that it executed a high volume of trades in over‑the‑counter securities costing less than US$5 per share.
Regulators also weighed remediation.
The SEC order said Canaccord increased AML compliance staffing, updated AML exception reports, revised SAR processes, added new supervision and review protocols, implemented new trade surveillance tools, and hired third‑party consultants to review its AML program.
The SEC also noted that Canaccord completed a lookback into suspicious activity it had failed to investigate and report during the relevant period.
Reuters reported that Canaccord has set aside US$75m for the settlement and has boosted staffing, training and surveillance.
Reuters quoted Canaccord lead independent director Michael Auerbach as saying the firm has overseen “a wholesale change in compliance leadership and oversight,” and is working with management to enhance its “culture of compliance” while engaging with regulators.
