As the Financial Industry Regulatory Authority (FINRA) continues to crack down on broker-dealers with anti-money laundering program (AML)-related deficiencies, broker-dealers and AML compliance officers (AMLCOs) should take note of the most common AML program compliance deficiencies mentioned in recent FINRA enforcement actions. These top six areas of deficiency are the most likely focus areas of FINRA enforcement going into 2017.
1. Ignoring Risks of Low-Priced Securities
The greatest number of FINRA AML-related enforcement actions in the past year revolved around failures to prevent and detect violations involving large volume sales of low-priced securities. FINRA sanctioned firms for failing to supervise new registered representatives bringing in penny stock business and failing to document and/or investigate high-risk activities involving lump penny stock deposits followed by rapid liquidation and proceeds distribution.