FINRA, the authority that regulates Wall Street, notified broker dealers last week of the range of financial penalties they can expect if their Bank Secrecy Act and AML Compliance efforts are found to be in violation of the law.
The FINRA guidance points to a smaller penalty range for small broker dealers found to be in violation of AML Compliance requirements, and an unlimited range for mid-size to large firms.
One area of concern regarding BSA/AML Compliance by broker dealers is the monitoring of transactions. Previously, some broker dealers relied on their clearing firms to conduct BSA/AML Compliance. Now, broker dealers will need to own their own transaction monitoring whether they are a clearing broker or not.
Wall Street Journal reporting noted that FINRA has stepped up its enforcement focus related to BSA/AML Compliance, and it expects Wall Street firms to display robust anti-money laundering controls required by the Bank Secrecy Act.
FINRA also specified its plan to fine Wall Street firms that do not establish formal fully documented AML plans that include independent testing, dedicated AML-program personnel, and regular training programs that train employees on AML Compliance at their firm.
FINRA also indicated that some failures in BSA/AML Compliance could result in suspension or even expulsion from FINRA, which would cease that broker dealer’s ability to conduct business in the U.S. financial system.
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