A Mamaroneck financial services firm has been censured for failing to implement anti-money laundering procedures despite several warnings.
The Financial Industry Regulatory Authority also imposed a $50,000 fine on Young America Capital LLC, in a Feb. 26 settlement.
“Since at least August 2020,” the settlement states, “Young America has failed to develop and implement a written anti-money laundering program reasonably designed to achieve compliance with the requirements of the Bank Secrecy Act.”
Young America’s CEO and majority owner, Peter James Formanek, consented to the sanctions on Feb. 17.
Young America is based at Safe Harbor Marina on Boston Post Road, Mamaroneck, and shares the address with Weinstein & Formanek CPAs.
Most of Young America’s revenue is derived from investment banking and from merger and acquisition advisory fees. It serves clients in industries such as the cannabis, life sciences, media, technology, and telecommunication industries.
Financial firms like Young America are required to monitor and identify suspicious transactions by their customers, according to the FINRA settlement, and to report the transactions to the Financial Crimes Enforcement Network. The anti-money laundering programs must be tailored to the firms’ types of customers.
But at least since August 2020, Young America has failed to implement a reasonable anti-money laundering program, according to FINRA. The firm’s written procedures state that it has no obligation to do so because it does not hold retail brokerage accounts. But FINRA says that position is wrong, and despite a warning from the U.S. Securities and Exchange Commission in 2020, the erroneous language remains in the firm’s written procedures.
Young America did revise its procedures in 2022 to include types of suspicious activities. But the red flags it identified only occur in retail brokerage accounts, according to FINRA, “even though the firm does not hold such accounts.” It also included guidance about suspicious activities in marijuana businesses but removed the guidance later that year, “even though the firm continued to work with marijuana-related businesses.”
To date, FINRA says, Young America still does not have written procedures for identifying red flags in its type of business, and it does not look for potential suspicious activity.
The settlement does not identify any specific money laundering activities that escaped notice.
Young America agreed to fix the problems within 60 days.
