By

Gerald J. Russello

01 April 2021

SEC Issues Risk Alert on Observations for Firm Compliance With Suspicious Activity Monitoring and Reporting at Broker-Dealers

On March 29, 2021, the U.S. Securities and Exchange Commission (SEC) Division of Examinations (EXAMS) issued a risk alert to remind broker-dealers of their obligations related to anti-money-laundering (AML) rules and regulations as well as to provide the staff’s observations of compliance items related to those obligations. The risk alert also is designed to assist broker-dealers with reviewing and enhancing their AML programs. The staff noted that mutual funds may benefit from the examination observations.

This is the latest EXAMS announcement of its expansion deeper into AML issues. This expansion further demonstrates that broker-dealers need to be prepared to address questions and concerns from both the SEC and the Financial Industry Regulatory Authority (FINRA) in a coordinated and efficient matter even if these overlap.

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21 May 2020

FinCEN Issues Notice on Reporting COVID-19 Criminal and Suspicious Activities, Companion Advisory on COVID-19-Related Medical Scams

On May 18, 2020, the Financial Crimes Enforcement Network (FinCEN), as part of its COVID-19-related response, issued a Notice Related to the Coronavirus Disease 2019 (COVID-19) reminding financial institutions of certain Bank Secrecy Act (BSA) obligations and pertinent information regarding reporting COVID-19-related criminal and suspicious activity (the Notice). Contemporaneously, FinCEN issued an Advisory on Medical Scams Related to the Coronavirus Disease 2019 (COVID-19) (the Advisory).

In light of the Notice and Advisory, firms should (a) continue to comply with their BSA obligations; (b) include COVID-19 detail only when that detail relates to the reported suspicious activity; (c) review policies and procedures to notify and to provide COVID-19 information to government agencies, including verification of the requesting agency; (d) review the Advisory red flags related to medical scams; and (e) consider revising policies and procedures as appropriate.

COVID-19-related frauds are a special emphasis for law enforcement and regulatory agencies, so failing to detect and report those issues could be viewed as a significant flaw in a firm’s anti-money laundering (AML) program.

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