Financial Crime World

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Broker-Dealer’s AML and OFAC Compliance: What You Need to Know

In today’s financial landscape, broker-dealers must navigate a complex web of regulations to ensure compliance with Anti-Money Laundering (AML) and Office of Foreign Asset Control (OFAC) requirements. To help firms stay ahead of the curve, FINRA has issued guidelines on various aspects of AML and OFAC compliance.

Customer Identification Program

Firms are advised to analyze identifying information provided by customers, including:

  • Name
  • Street address
  • Zip code
  • Telephone number
  • Date of birth
  • Social Security number

The Treasury Department and SEC recommend ensuring consistency between this information to prevent potential fraud.

Source of Funds Documentation

While there is no specific regulation requiring firms to document the source of account funding for entity accounts, it is considered a best practice based on the firm’s risk assessment. For private banking accounts established for non-U.S. persons with a $1,000,000 minimum aggregate deposit requirement, firms must ascertain the source(s) of funds deposited into the account.

SAR Reporting

Firms are exempt from reporting certain violations to law enforcement authorities, including:

  • Robbery or burglary reported to appropriate authorities
  • Lost, missing, counterfeit, or stolen securities reported under Rule 17f-1 under the Securities Exchange Act of 1934
  • Violations of federal securities laws or self-regulatory organization rules by the broker-dealer, its officers, directors, employees, or registered representatives

Third-Party Wires

Firms are not required to reject third-party wires, but they must conduct due diligence before accepting them. This may include:

  • Contacting the customer
  • Obtaining a signed Letter of Authorization
  • Written statements regarding the reason for the wire transfer

Introducing and Clearing Firms

Both introducing and clearing firms have independent AML obligations and are responsible for filing SARs for suspicious transactions. Introducing and clearing brokers involved in the same transaction may file a joint SAR as long as it includes all relevant facts about the transactions.

OFAC Compliance Tools

The U.S. Treasury’s Office of Foreign Asset Control (OFAC) provides various tools to help firms search its sanctions lists, including:

  • OFAC’s Sanctions List Search Tool
  • Automated software packages available for purchase
  • Formats that can be easily interpreted by automated systems and software programs on the SDN and Consolidated Sanctions List webpages

Firms are advised to consult OFAC guidance for further information regarding their obligations under OFAC regulations.

About [Broker-Dealer Name]

[Broker-Dealer Name], a leading financial services firm, is headquartered in [Location] with a customer base of [Number]. With a focus on providing exceptional service and compliance with regulatory requirements, the company has established itself as a trusted partner for investors seeking to grow their wealth.

Stay ahead of the curve with [Broker-Dealer Name]’s commitment to AML and OFAC compliance. Contact us today to learn more about our services and how we can help you achieve your financial goals.