FINRA’s 2022 Report on Risk Monitoring and Examination Activities
The annual FINRA Report on Risk Monitoring and Examination Activities covers nearly 60 pages and includes new information about risk management. FINRA highlights several priorities and will make these findings public in the future. As part of its open-book examination, FINRA can examine how firms are handling risks related to complex products and ensuring they’re in the best interests of retail customers. The report focuses on identifying areas for improvement and sharing the results of examinations with the Firms.
Among the changes in the Report, FINRA has made a few significant updates. It now requires firms to obtain and verify the compliance of third-party providers before establishing a beneficiary, trustee, or power of attorney. Additionally, FINRA has added new material to the Report, including examination findings, effective practices, and five new topics. A recent survey indicated that 76 percent of firms already use a cloud-based surveillance platform.
FINRA’s 2022 Report outlines the examination priorities for member firms in the coming year. The report outlines areas of focus for the next year and identifies opportunities for firms to improve their compliance, supervisory, and risk management programs. In addition, a panel of industry experts from RegEd and Eversheds Sutherland (US) will share their experience, insights, and recommendations on how to improve risk management and compliance programs.
FINRA’s guidance for members on AML/CFT compliance
FINRA’s guidance for members on the topic of AML/CFT compliance has been updated in light of the government’s priorities in the fight against money laundering and the financing of terrorism. These priority areas represent long-standing threats to the U.S. financial system, including cybercrime, foreign and domestic terrorism, securities fraud, internet-enabled fraud, and transnational criminal organization activity. This Notice outlines the new requirements for member firms and encourages them to update their AML programs now rather than later.
FINRA’s new guidance for member firms requires them to develop a comprehensive written AML program and monitor their BSA compliance. It is important to note that a new rule does not trigger a change in the BSA, but FINRA’s guidance for members recommends that firms incorporate the new requirements into their risk-based AML program, as well as review and analyze red flags based on their risk profile.
FINRA has released two important guidance documents for member firms: Regulatory Notice 19-18 and Regulatory Notice 21-03. Regulatory Notice 19-18 guides member firms on potential red flags that may indicate suspicious activity. This guidance is the first major update to FINRA’s guidance for members regarding AML/CFT compliance since Anti money laundering 2002. The guidance also includes information about recent FINRA AML enforcement actions.
FINRA’s guidance for member firms on AML/CFT compliance
FINRA’s recent regulatory guidance for member firms on AML/CTF compliance urges firms to consider the latest AML/CFT priorities set by the U.S. Treasury Department’s Financial Crimes Enforcement Network. The priorities highlight specific threats and provide informational resources that firms can use to improve their compliance programs. Additionally, FINRA recommended that firms evaluate red flags that are related to their business practices and examine whether technological changes may help their AML/CFT compliance efforts.
The guidance for member firms continues to grow in scope, adding material to existing sections while addressing new topics. It also cites enforcement actions involving large fines and significant fines. The guidance also provides examples of how member firms can implement technology solutions and improve the monitoring of red flags. FINRA states that it will adopt the Priorities as a comprehensive compliance resource for its members.
FINRA’s guidance for member firms includes requirements to develop and implement a written AML/CFT compliance program. FINRA Rule 3310 requires member firms to evaluate the risk profile of their customers and the application environment to ensure that they comply with BSA standards. The rule also requires firms to conduct annual reviews of their AML Compliance framework. Bovill routinely performs such reviews for its broker-dealer clients. These reviews can highlight any shortcomings and strategically implement remediation measures to ensure that the framework is in line with FINRA’s AML/CFT compliance priorities.
Originally Published on timebusinessnews
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