BROKERS MUST UPDATE AML COMPLIANCE MANUAL AND ANNUAL AML REVIEW

BROKERS MUST UPDATE AML COMPLIANCE MANUAL AND ANNUAL AML REVIEW

Why:

FINRA has amended Rule 3310, The Anti-Money Laundering Compliance Program. It now requires brokers to include in their AML Compliance Manual the duties imposed by FinCEN’s Customer Due Diligence Rule. It also requires, as part of the annual independent party review of their AML program, testing for compliance with this additional duty.

What:

The amended rule requires that a firm’s AML Compliance Manual include conducting ongoing customer due diligence to understand the nature and purpose of the customer relationship and developing a customer risk profile. The firm is required to update the customer information. Based on this data, the firm must monitor trading in the account to identify and report suspicious transactions. This update duty is in addition to the duty to update retail customer data at least every 3 years under SEC Rule 17a-3.

Now What:

Firms will need to revise their AML Compliance Manual to reflect these new duties. They will also have to make sure that the annual review required under the rule includes a review of these new procedures.

Questions; Comments: Please feel to contact me with any questions or comments (phone 212 455 04676; e-mail: msimkin@securitiesregslawyer.com ).

Morris Simkin
May 2018