Although the SEC is the ultimate regulator of the securities industry, The Financial Industry Regulatory Authority, or FINRA, publishes Monthly Disciplinary Reports and is the private corporation that acts as a self-regulatory organization.
FINRA is a non-governmental organization that performs financial regulation of member brokerage firms and exchange markets.
Advances in technology and product innovation, along with expanding criminal enterprise, present an increased need for regulatory and risk mitigation considerations related to AML. An AML compliance program should consider risk exposure and contemplate mitigation steps for this changing landscape.
An example would be innovations in payment technologies. The use of international Automated Clearing House (ACH) transfers, remote deposit capture, and mobile phone payments present potential risks that require careful consideration.
Faced with increasing compliance costs, firms are seeking efficiencies in operations and technology to lower these rising expenses. The need to achieve efficiencies is driving firms toward centralization and standardization of AML operations, as well as function-level integration of AML and anti-fraud programs and resources. Such integration can drive improvements in program efficacy, real-time monitoring, and present the firm with other cost benefits.
The many regulatory changes coming from the three main bodies – FINRA, FinCEN, OFAC – require your ongoing attention. Your firm must continuously fine-tune systems, routinely train personnel and periodically refine risk assessments to manage an effective AML compliance program.
It is important to remember that money laundering and terrorist financing comes in all shapes and sizes. All financial institutions regardless of size and sector must comply with the regulations or face potential risk exposure, regulatory fines as well as criminal and civil liability.
More and more, criminals are manipulating firms with low-priced securities, issues from particular countries and other creative ways to place and layer transactions for money laundering purposes. Keeping a watchful eye by setting trading alerts, money flows, customer account changes, and margin levels will advance AML and fraud compliance monitoring at the firm.