On Jan. 10, 2023 the Financial Industry Regulatory Authority (FINRA) published its 2023 Report on the Examination and Risk Monitoring Program. This year, for the first time, FINRA introduced a financial crimes section in the report discussing anti-money laundering (AML), fraud and sanctions, cybersecurity and technological governance, and manipulative trading. Including these subjects in the Report demonstrates FINRA’s increased attention to protecting investors against the threats of financial crimes. 

Requirements for member firms

The new Report provides guidelines for member firms to equip themselves with the tools and protocols to deter and mitigate the risk of financial crimes. FINRA reminds member firms to:

  • Develop and implement a written AML program.
  • Establish and implement AML policies and procedures to detect and cause the reporting of suspicious procedures.
  • Provide independent testing for compliance each calendar year.

See FINRA Rule 3310 (Anti-Money Laundering Compliance Program) for all requirements.

Emerging risk areas

FINRA highlighted several emerging risk areas with respect to financial crimes, including specifically: 

  • Manipulative trading in small-cap IPOs
  • Sanctions evasion
  • Inadequate due diligence
  • Failure to undertake ongoing monitoring and reporting of suspicious transactions
  • Inadequate testing

Guidance for emerging risk areas

The Report provides guidance for effective practices that help avoid the above-referenced pitfalls. Member firms are encouraged to familiarize themselves with the following practices and revise their internal policies accordingly:

  • Review regulatory alerts, advisories, significant cases, and other regulatory updates.
  • Conduct formal, written AML risk assessments that are updated in appropriate situations, such as during the changes to business lines, products and services, registered representatives, customers, or geographic areas in which the firm operates or material macroeconomic or geopolitical events. 
  • Verify customers’ identities when establishing online accounts and reviewing the IP addresses of new online account applications and transfer requests.

To comply with FINRA’s 2023 regulations and guidance, we encourage our clients to continue to conduct up-to-date assessments of AML compliance programs. In making such assessments, firms should incorporate input from key business units and relevant legal and compliance personnel. Doing so will support the firm’s efforts to identify and address the risks specific to its business in a reasonable manner that is also consistent with current industry standards.


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