In October 2021, FINRA released Regulatory Notice 21-36 discussing the first government-wide priorities for anti-money laundering and countering the financing of terrorism policy, which was mandated by the Anti-Money Laundering Act of 2020 (AML Act).
The AML/CFT Priorities
FinCEN’s new AML/CFT Priorities focus on threats to the U.S. financial system and national security and reflect longstanding and continuing AML/CFT concerns previously identified by FinCEN and other U.S. government departments and agencies. They include predicate crimes to money laundering that generate illicit proceeds that illicit actors may launder through the financial system. FinCEN set forth eight priorities:
- Corruption;
- Cybercrime, including relevant cybersecurity and virtual currency considerations;
- Foreign and domestic terrorist financing;
- Fraud (including securities and investment fraud and internet-enabled fraud);
- Transnational criminal organization activity;
- Drug trafficking organization activity;
- Human trafficking and human smuggling; and
- Proliferation financing.
FinCEN provides details about each of the individual priorities and includes references to prior FinCEN advisories and guidance documents that identify related typologies and red flags that may help broker-dealers comply with their BSA obligations.
Incorporating FinCEN’s New AML/CFT Priorities
FinCEN has clarified that the publication of the AML/CFT Priorities does not create an immediate change in the BSA requirements or supervisory expectations for covered non-bank financial institutions (NBFIs), including broker-dealers. FinCEN has noted further that covered NBFIs are not required to incorporate the AML/CFT Priorities into their risk-based AML programs until the effective date of final regulations promulgated by it. The BSA, as amended by the AML Act, requires that FinCEN promulgate any appropriate regulations regarding the AML/CFT Priorities within 180 days of their establishment.
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 encourages member firms to begin to evaluate how they will incorporate and document the AML/CFT Priorities, as appropriate, into their risk-based AML programs. Member firms that are beginning to evaluate how they will do so 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.
For more information on individual priorities and red flags, check out FinCEN’s AML/CFT National Priorities (PDF Download) and Additional Guidance for NBFIs (PDF Download).
MasterCompliance provides expert consulting, outsourcing, and implementation tools in planning and budgeting for your firm’s compliance responsibilities. If your firm needs help understanding and implementing FinCEN’s new AML/CFT priorities, please contact us.