Earlier this month, FINRA hosted a Small Firm Conference Call to discuss updates and implications of COVID-19 (Coronavirus). If you were not able to listen to the call live, a replay recording is available on demand. This recording provides and discusses many highlights noted in FINRA’s FAQs Related to Coronavirus Pandemic.
Since there was a wealth of information discussed, this is the first of two blog posts where we break down the content from the call and cover as many key points as possible.
FINRA Annual Assessment
Typically, the FINRA Annual Assessment has an April due date. Because it is an automated system process, firms will still receive the invoices; however, FINRA has offered relief for small firms to defer payment until later in the year. FINRA defines small firms as having fewer than 150 registered persons.
Financial Services as an Essential Business
Many states are defining financial services as an essential business. When a state issues an order or change to the order, make sure you review the order for the definition of an “essential business” and look for the inclusion of financial services. Also, be sure to check for permissible functions and the total number of people allowed in the workplace. For any individual that continues to go onsite, the firm should provide a letter defining their role as essential in the company and the necessity of having them onsite.
Cybersecurity While Teleworking
FINRA understands the resource challenges that small firms face while working remotely. At the end of March, FINRA released the following alert: Cybersecurity Alert: Measures to Consider as Firms Respond to the Coronavirus Pandemic (COVID-19). The alert supplies guidance on high-level categories related to the security of software and hardware of associated persons while working from home. Common attacks are also noted. Best practices on awareness and training are also covered.
Updates to Business Continuity Plans
FINRA understands that many firms’ Business Continuity Plans (BCP) do not cover the pandemic-related changes that are sweeping the country. FINRA wants to make sure that the firm evolves as the situation evolves, mitigates, and adjusts. Firms should document what changes have been made. Also, they should document the mitigation policies to show why they made the change and the expected duration.
Anti-Money Laundering Testing
FINRA Rule 3310 Anti-Money Laundering (AML) Compliance Program requires calendar year testing, therefore firms still have until December 31, 2020 to perform any AML independent testing.
Be sure to check out Part 2 of this blog post where we discuss additional regulatory relief topics from this conference call. For additional considerations for firms during these unprecedented times, check out our previous blog posts related to COVID-19. Please contact us today if you would like more expert consulting in any areas mentioned above or designing a custom program.