FINRA Finds Inadequate AML Programs at Securities Firms

In the anti-money laundering (AML) section of its 2019 report, FINRA noted that it has found deficiencies in the design and implementation of systems and processes to detect and report suspicious activity. Included in the findings:

  • Firms were not tailoring their AML programs for their business, such as adjusting for changes in revenue sources or increased activity in higher-risk customers, and were simply relying on FINRA’s AML resources.
  • Red flags were missed due to deficient transaction monitoring, inadequate delegation of duties, and a lack of focus on third-party wire transfers.
  • Introducing firms continued to rely primarily or entirely on their clearing firm for transaction monitoring and suspicious activity reporting.

FINRA blamed part of the problem on “an ongoing misconception that securities trading does not need to be monitored for suspicious activity reporting purposes.” In a joint statement in October, the SEC, CFTC, and FinCEN confirmed that broker-dealers must comply with AML and certain other obligations under the Bank Secrecy Act (BSA). The FINRA report made it clear that firms cannot just implement a basic AML program to meet their obligations; the program must be comprehensive, tailored specifically to the business, and regularly updated as conditions change.

This report highlights the importance of choosing an AML compliance solution that goes beyond static rules and can use machine learning to evolve and stay ahead of the criminals. Request a demo to see how Beam can help you exceed regulatory obligations to protect your business, customers, and bottom line.