Compliance and Regulatory Alerts - 05-13-19

FINRA Issues Guidance on Anti-Money Laundering Compliance Obligations

In a new Regulatory Notice, FINRA provided guidance on reporting and monitoring suspicious activities under a member firm’s anti-money laundering (“AML”) compliance program.

FINRA Rule 3310 requires member firms to develop and implement a written AML program reasonably designed to achieve and monitor compliance with the requirements of the Bank Secrecy Act (BSA) and related regulations. In general, this includes the detection and reporting of transactions by a broker-dealer that “involves or aggregates funds or other assets of at least $5,000, and the broker-dealer knows, suspects or has reason to suspect that the transaction” (i) contains funds from an illegal activity; (ii) is designed to evade regulations under the BSA; (iii) does not appear to have a "reasonable explanation;" and (iv) might be facilitating criminal activity. Broker-dealers must report such activity by filing a suspicious activity report (SAR).

The FINRA guidance provides numerous examples of potential money laundering “red flags” for firms to “consider incorporating” in their compliance programs. FINRA highlighted these examples under various categories, including customer due diligence and interactions with customers, deposits of securities, securities trading, money movements, insurance products and other indicators of suspicious customer behavior.

Furthermore, FINRA noted that these guidelines are not comprehensive and that firms should be “aware of emerging areas of risk, such as risks associated with activity in digital assets.” FINRA also stated that the new guidelines are intended “to assist broker-dealers in complying with their existing obligations” and “do not create any new requirements or expectations.”

To learn more about Bates Group’s AML and Financial Crimes services, please contact:

Edward Longridge, Managing Director, Financial Crimes -


See here for a recent conversation with Managing Director Edward Longridge on AML compliance issues.


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