Brokers must prepare to beef up AML controls: FINRA

The U.S. Financial Industry Regulatory Authority Inc. (FINRA) is calling on broker-dealers to step up their anti-money laundering (AML) efforts ahead of tougher new rules.

Earlier this year, the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) issued the first government-wide priorities for combatting money laundering and terrorism financing.

FinCEN also issued new guidance for non-bank financial institutions, including broker-dealers, on applying the priorities. Those priorities include fighting corruption, cybercrime (including crypto-asset considerations) and fraud (including securities and investment fraud), among other concerns.

FINRA is now pushing brokers to start examining how to adopt those new priorities into their AML compliance programs.

While new requirements won’t take effect until the final regulations are in force, firms are advised to start considering the potential risks associated with their products and services, their customers, and the regions in which they operate.

“Firms that are beginning to evaluate how they will do so may wish to begin considering potential updates to the red flags that they have incorporated into their risk-based AML compliance programs,” FINRA said in a notice.

Additionally, firms should begin potential technological changes that my be required, including changes to the technology that they use to monitor and investigate suspicious activity, FINRA said.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.