Acting as his firm’s Anti-Money Laundering Compliance Officer (AMLCO), Schaefer failed to ensure the implementation of independent tests of the firm’s AML compliance programs. Schaefer did not use an independent third party to conduct the firm’s AML tests; rather, he drafted reports and presented them to an unqualified administrative assistant, who signed off on the reports without conducting any AML testing. Schaefer created and submitted inaccurate substitute compliance meeting attendance lists to FINRA staff during the course of FINRA’s examination of Schaefer’s firm and without telling FINRA staff that the sheets were recreations.
Schaefer failed to timely submit the administrative assistant’s fingerprints to CRD, even though the individual had access to the firm’s books and records, maintained the firm’s check book and possessed an ink stamp of Schaefer’s signature, which he used to sign firm checks. Schaefer failed to ensure that his firm established, maintained and enforced written supervisory control policies and procedures, and failed to ensure that an employee’s fingerprints were submitted to CRD, thereby causing his firm to violate Section 17(f)(2) of the Securities Exchange Act of 1934 and Rule 17f-2 thereunder.