The Financial Industry Regulatory Authority (FINRA) is encouraging member firms to start proactively incorporating new anti-money laundering and countering the financing of terrorism (AML/CFT) priorities mandated by Congress into their risk-based compliance programs.
FINRA issued a regulatory notice Friday outlining steps financial institutions should take to realign their AML compliance to the new priorities. Nonbanking financial institutions, including broker-dealers, will have a longer lead time to begin incorporating these priorities into their AML programs, FINRA said.
In June, the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) laid out its AML/CFT priorities under legislation passed by Congress late last year. The priorities represent a mix of long-standing and continuing threats to the U.S. financial system and national security: corruption; cybercrime; foreign and domestic terrorism financing; fraud (including securities, investment, and internet-enabled); transnational criminal organizational activity; drug trafficking; human trafficking and human smuggling; and proliferation financing.
FinCEN has not yet issued final regulations—it is required to do so within 180 days of its June 30 announcement—on how financial institutions should incorporate these priorities into their AML compliance programs, but FINRA said member firms should begin planning to do so.
As part of preparation, member firms “may wish to begin considering potential updates to the red flags that they have incorporated into their risk-based AML compliance programs in light of the risks presented by factors such as their business activities, size, the geographic locations in which they operate, the types of accounts they maintain, and the types of transactions in which they and their customers engage,” FINRA said.
In addition, FINRA encouraged member firms to leverage new technology “to monitor and investigate suspicious activity” aligned to the new AML/CFT priorities.