The Financial Industry Regulatory Authority (FINRA) is encouraging member firms to start proactively incorporating new anti-money laundering policies and countering the financing of terrorism (AML/CFT) priorities mandated by Congress into their risk-based compliance programs.
As many of you will recall, the AML Act became law on January 1, 2021, and, among other amendments to the Bank Secrecy Act (BSA), requires FinCEN to issue the AML/CFT Priorities and update them at least once every four years. On June 30, 2021, FinCEN issued its first government-wide AML/CFT Priorities. The AML/CFT Priorities are intended to assist covered financial institutions, including broker-dealers, in their efforts to meet their obligations under laws and regulations designed to combat money laundering and counter terrorist financing.
The priorities represent a diverse mix of long-standing and continued threats to the U.S. financial system and national security. These priorities include: 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, 2021 announcement—on how financial institutions should incorporate these priorities into their AML compliance programs. However, FINRA mentioned that member firms should begin updating their AML programs sooner rather than later.
FinCEN has stated that the final regulations will specify how financial institutions should incorporate the AML/CFT Priorities into their risk-based AML programs, and that not every priority will be relevant to every covered institution. FinCEN has also stated that covered NBFIs may nevertheless wish to start considering how they will incorporate the AML/CFT Priorities into their risk-based AML programs, such as by assessing the potential risks associated with the products and services they offer, the customers they serve, and the geographic areas in which they operate.
Although the issuance of the AML/CFT Priorities does not trigger an immediate change in the BSA requirements or supervisory expectations for member firms, FINRA is encouraging member firms to begin to evaluate how they will incorporate and document the AML/CFT Priorities, as appropriate, into their risk-based AML programs.
Firms may also wish to begin considering any potential technological changes that may be appropriate in order to incorporate the AML/CFT Priorities into their risk-based AML compliance programs, including changes to the technology that they use to monitor and investigate suspicious activity.
For additional information on FinCEN’s implementation of the AML Act, click here.