FINRA Issues Notice to Remind Firms of Nation-wide AML/CFT Priorities

  • Richard Marley
  • October 13, 2021
  • 2 minutes read
  • 408

FINRA has issued a notice reminding all member firms to comply with AML/CFT priorities as mandated under the FinCEN’s AML Act. 

The US-based regulator, Financial Crimes Enforcement Network (FinCEN), issued its first government-wide AML/CFT policy in June 2021, which was mandated under the Anti-Money Laundering Act of 2020 (AML Act). Non-Bank Financial Institutions were also provided with comprehensive guidance on how to approach the AML/CFT Priorities.

This week, the Financial Industry Regulatory Authority (FINRA) issued a notice reminding all member firms to comply with AML/CFT priorities to avoid facing non-compliance fines.

In the notice, FINRA highlights that the country’s AML/CFT policies reflect on money laundering and terrorism financing threats posed to the US, as previously identified by FinCEN and other US government departments and agencies. Eight priorities were listed down by FinCEN that identified the potential red flags to help broker-dealers comply with their BSA obligations.

The BSA, as updated in the AMLA Act, also encourages the establishment of a risk-based AML compliance program by the financial institution, states FINRA’s notice. With the adoption of a risk-based approach, each customer is assigned a rating based on the level of risk associated in order to perform standard due diligence or Enhanced Due Diligence (EDD) processes. 

Additionally, the notice states, “FINRA Rule 3310 requires every member firm to develop and implement a written AML program reasonably designed to achieve and monitor for compliance with the requirements of the BSA and the implementing regulations promulgated thereunder by the Department of the Treasury”. 

In its notice, FINRA has also promoted the use of technologies such as automated solutions for compliance purposes, as well as to monitor and investigate suspicious activities. Automated solutions streamline processes such as KYC verification and AML screening, providing an effective alternative to manual KYC processes. 

Suggested Read: FinCEN Launches Regulatory Process For AML Regulation on Antiquities