Annual Compliance

Annual Compliance Requirements: Year-End Priorities

It’s that time of the year again! As the fourth quarter ticks by, we have compiled a helpful end of year to-do list to aid small broker-dealers in addressing and closing out important annual compliance requirements.

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AML Podcast

AML Podcast Released by FINRA – Unscripted

During April and May 2019, FINRA introduced a new AML podcast. FINRA’s unscripted podcast explained the importance of a solid AML program, its importance to the overall industry, and best practices. Blake Snyder and Jason Foye of FINRA’s AML investigative unit were the guest speakers.

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Customer Identification Program (CIP): Common Questions – Part II

[Continued from Customer Identification Program (CIP): Common Questions – Part I]

What Is A “Reasonable Time” To Verify Customers’ Identities?

A customer’s identity must be verified within a “reasonable time” before or after the customer’s account is opened. The rule does not specify what counts as a “reasonable time,” and the Adopting Release for the Broker-Dealer CIP Rule emphasizes that broker-dealers must be reasonably flexible when undertaking such verification. The broker-dealer must be able to undertake verification before or after an account if opened, as the amount of time needed may depend on various factors, which is part of the firm’s risk assessment.  A firm’s CIP procedures must enable the broker-dealer to form a reasonable belief that it knows the true identity of each customer. Read More…

Customer Identification Program (CIP): Common Questions – Part I

In our previous post on customer identification programs, “Customer Identification Program (CIP): Definitions and Requirements,” we defined “account” and “customer” and went over the minimum requirements for CIP procedures and verification, including touching on non-documentary means of identity verification. This post will get a little more specific, addressing common questions firms have when developing and implementing their customer identification programs. Read More…

Customer Identification Program (CIP): Definitions and Requirements – Part II

[Continued from Customer Identification Program (CIP): Definitions and Requirements – Part I]

How Does Risk Assessment Affect a Firm’s CIP?

Appropriate verification procedures for a CIP are governed by a risk-based assessment. A CIP must include risk-based procedures for verifying the identity of each customer to a reasonable and practicable extent. These procedures must be based on the broker-dealer’s assessment of the relevant risks, including those presented by the types of accounts maintained by the broker-dealer, the methods of opening accounts, and the types of identification information available. Additionally, this risk-based assessment should take into consideration the broker-dealer’s size, location, and customer base.

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Customer Identification Program

Customer Identification Program (CIP): Definitions and Requirements – Part I

Customer Identification Program

A broker-dealer must establish, document, and maintain a written Customer Identification Program (CIP) as a part of the broker-dealer’s anti-money laundering (AML) compliance program (31 CFR 1023.220) as required by FINRA Rule 3310. The CIP must be appropriate for the broker-dealer’s size and business, and it must outline the following procedures: Read More…