For nine years, the firms failed to comply with a key aspect of the AML compliance program for broker-dealers by failing to subject approximately 220,000 new client accounts to the required identity verification process.

As part of the AML compliance program requirements, broker-dealers must establish and maintain a written customer identification program that enables them to verify the identity of each client opening a new account.

“FINRA found that the firms' CIP system was deficient, as the electronic systems supporting it contained a design flaw, which persisted from 2003 to 2012,” the US authority said in a statement yesterday.

As an example, when the firms' transaction-processing system assigned client identifiers to new  accounts, it sometimes recycled identifiers previously assigned to accounts that had been closed, FINRA said.

In settling this matter, WFA and WFAFN neither admitted nor denied the charges, but consented to the entry of FINRA's findings.