FINRA issues guidance on FinCEN AML / CFT priorities | Holland & Knight LLP


The Financial Sector Regulatory Authority (FINRA) has published a regulatory notice on October 8, 2021, encouraging its broker members to review and prepare to integrate into their own compliance programs the national priorities in terms of anti-money laundering policy (AML) and the fight against the financing of terrorism (CFT) (the Priorities ) established by the Financial Crimes Enforcement Network (FinCEN) of the US Department of the Treasury in June 2021, as required by the Anti-Money Laundering Act of 2020 (AMLA 2020). As regulations implementing the priorities are expected later this year, the FINRA opinion, together with recent FINRA enforcement actions, demonstrates the need for brokers to ensure their compliance programs are solid and aligned with newly issued priorities.

AML / CFT priorities

On June 30, 2021, FinCEN released government-wide priorities for AML and CFT policy, as required by AML 2020.1 LAB / CFT priorities are intended to help brokers and other covered financial institutions meet their LAB / CFT compliance requirements. Priorities focus on threats to national security and the US financial system and include the following categories: 1) corruption, 2) cybercrime, including relevant cybersecurity and virtual currency considerations, 3) foreign terrorist financing and national, 4) fraud, 5) transnational criminal organization activity, 6) drug trafficking organization activity, 7) human trafficking and smuggling and 8) proliferation financing.

On the same day, FinCEN, in coordination with relevant federal and state regulators, issued a statement to brokers (and other non-bank financial institutions, or NBFIs) providing further guidance on implementing the priorities. , as implementing regulations relating to priorities. are unlikely to be issued until the end of this year. The statement stressed that while Covered NBFIs are not yet required to make changes to their risk-based AML programs in response to the Priorities, they should begin to assess how to incorporate the Priorities into their compliance programs. Respective LBA.

Priorities integrated into AML / CFT compliance programs

In its October 8 opinion, FINRA encouraged its member companies to prepare to incorporate and document the priorities in their AML compliance programs. FINRA Rule 3310 requires each member firm to “develop and implement a [AML] program reasonably designed to achieve and monitor compliance with the requirements of the Banking Secrecy Act (BSA) and implementing regulations promulgated by the Treasury Department. In its opinion, FINRA made it clear that while the priorities do not affect an immediate change in accordance with BSA requirements, its members should start to assess their own AML compliance programs and, on the date of entry into force of the final regulations dealing with Priorities, “to be able to examine and integrate, where appropriate, the AML / CFT Priorities in their risk management. anti-money laundering programs. “Among other things, FINRA noted that brokers” may wish “to update their compliance programs by updating the” red signals “incorporated into their compliance programs. of AML in light of their business operations, size, geographic location and in view of “potential technological changes” to their programs, including “changes to the technology they use to monitor and investigate suspicious activity ”.

Priorities align with FINRA’s recent focus on anti-money laundering compliance

The October 8 advisory is just the most recent example of FINRA’s focus on anti-money laundering compliance.

Other opinions and statements urged members to assess certain scenarios or red flags in areas currently high on the agenda.2 For example, in a recent podcast focusing on the link between cybersecurity and AML, Jason Foye, director of FINRA’s Money Laundering Investigation Unit, noted that “cyber events are noteworthy in the part of Suspicious Activity Reports, or SARs ”and discussed in detail, the links between cybercrime and cybercrime and money laundering.3 The inclusion of the issue of cybersecurity in the priorities suggests that FINRA will continue to focus on cybersecurity issues.

In addition, recent FINRA enforcement actions, which resulted in significant fines and suspensions for violations of Rule 3310, also indicate that FINRA will adopt the Priorities in monitoring AML compliance of member firms. In the past 12 months, there have been at least 20 FINRA enforcement actions against member companies and / or individuals in which penalties have been imposed for violations of Rule 3310 involving failure to comply with BSA / AML bonds. Several cases have focused, in particular, on the failure to adopt the technological solutions necessary to properly identify and monitor red flags and suspicious activity. Notably, in at least 13 cases, FINRA enforcement sanctions have targeted individuals, including business executives and compliance officers, who have faced fines and suspensions.

In light of these recent regulatory announcements and enforcement actions, brokers should expect FINRA’s regulatory reviews to continue to focus on AML compliance, which will soon include a review for the incorporation of priorities in these programs. FINRA’s October 8 advisory makes it clear that brokers need to review and assess how AML compliance programs can be tailored and aligned with priorities in anticipation of final regulations likely to be released at the end of 2021. More Generally, dealers and dealers should continue to carefully assess their approach and commitment to the organization’s overall compliance function, ensuring that sufficient financial and human resources are allocated to compliance, and that compliance professionals Compliance are empowered enough to act and communicate across the company and up to senior management and the oversight board.


1 For a more detailed overview of the priorities, see the article written by Holland & Knight, “FinCEN announces national AML / CFT policy priorities and also proposes the development of rules to establish a “no-action letter” process, ” The Banking Law Review, October 2021

2 See, for example, FINRA Regulatory Notice 21-03, “FINRA urges companies to review their policies and procedures regarding potential securities fraud red flags involving low-priced securities, “FINRA Regulatory Notice 19-18,”FINRA advises companies on monitoring and suspicious activity reporting obligations“and FINRA Podcast,”Overlapping Risks, Part 2: Combating Money Laundering and Exploitation of Older Persons“, November 10, 2020

3 FINRA Podcast, “Overlapping risks, Part 1: Anti-money laundering and cybersecurity“, October 27, 2020

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