Firms must comply with the Bank Secrecy Act and its implementing regulations (“AML rules”). The purpose of the AML rules is to help detect and report suspicious activity including the predicate offenses to money laundering and terrorist financing, such as securities fraud and market manipulation.
FINRA reviews a firm’s compliance with AML rules under FINRA Rule 3310, which sets forth minimum standards for a firm’s written AML compliance program. The basic tenets of an AML compliance program under FINRA 3310 include the following.
- The program has to be approved in writing by a senior manager.
- It must be reasonably designed to ensure the firm detects and reports suspicious activity.
- It must be reasonably designed to achieve compliance with the AML Rules, including, among others, having a risk-based customer identification program (CIP) that enables the firm to form a reasonable belief that it knows the true identify of its customers.
- It must be independently tested to ensure proper implementation of the program.
- An individual responsible for AML must be designated to FINRA.
- Ongoing training must be provided to appropriate personnel.
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