I conduct AML testing. Broker-dealers are required to have their Anti-Money Laundering Program independently tested on an annual or biennial basis according to the Firm’s business activities. The testing is intended to review and assess the adequacy of and level of compliance of the broker-dealer with its AML Plan, and that of the Plan with FINRA rules and procedures.
I will then issue a report which shall reflect the assessment of your AML Program and include any necessary recommendations to improve your broker-dealer’s level of compliance.
Whether as part of my broker-dealer compliance retainer program, or on an as needed basis, as new rules are published I can help you determine whether they are applicable to your broker-dealer’s business model.
Many Private Placement broker-dealers, for example, find drafting, or complying with, AML procedures daunting, especially those areas involving Customer Identification (“CIP”), if only because the rules are typically guilty of a one-size-fits-all mentality. I can help you make sense of this reality.
While all of the procedures in your AML Plan are important, I believe the below areas are the most frequently implemented and sadly the most frequently misunderstood.
AML Customer Identification Program (CIP):
CIP requires that your broker-dealer gather information and documents to both identify the client, and then verify that identification.
For example, for an individual (natural person) client, you would gather the following identification information: Name, SSN or other identifying number, address, and date of birth. You would then utilize documentary or non-documentary means to verify the identity given to you. Documentary means are generally a government-issued item such as a non-expired passport or driver’s license. If the client could not or did not provide this item and you considered this reasonable and non-suspicious, you would then utilize non-documentary verification. This might include obtaining an individual’s financial statement, contacting another financial institution such as the individual’s bank to compare the information given, and/or comparing the information against a public database.
I can assist you in navigating the eventual shades of grey you may encounter.
Office of Foreign Asset Control (“OFAC”), and FinCEN 314a Requests:
OFAC’s Specially Designated National’s List is an extensive list that is continually updated. Your broker-dealer must screen all new clients against the entire list, and all clients against the list as it is updated.
FinCEN regularly posts 314a Requests that a broker-dealer must review and screen against its client list.
For the most part there are no exemptions of any kind to these requirements, but I can help you to streamline these processes as much as possible.