FINRA and SEC Exam Priorities for 2016 | Deloitte US has been added to your bookmarks.
2016 FINRA and SEC exam priorities
Increasing focus on firm culture and anti-money laundering
In January 2016, Financial Industry Regulatory Authority (FINRA) and the Securities & Exchange Commission (SEC) published their 2016 priorities letters; both expressly stated they are increasing their examination focus on anti-money laundering (AML), as well as other issues.
2016 Financial Industry Regulatory Authority priorities letter
The 2016 FINRA priorities letter focused on two key elements:
- FINRA announced that it will focus on the frameworks that firms use to develop, communicate, and evaluate conformance with their culture
- FINRA is telling firms that if they don't take compliance seriously, it is going to be looking hard at their compliance infrastructures
- FINRA appears to be telling firms that compliance should be a key function of firms' operations and that firms are expected to encourage their compliance departments to be active
- AML controls are addressed as a supervisory issue
- FINRA stated as well that it plans to assess the adequacy of firms’ monitoring for suspicious activity, including surveillance of both money movements and trading activities
- Firms should have processes in place to identify suspicious trading activity
2016 Securities & Exchange Commission priorities letter
In their 2016 priorities letter, the SEC stated that it "will continue to examine clearing and introducing broker-dealers’ AML programs, using our analytic capabilities to focus on firms that have not filed the number of suspicious activity reports (SARs) that would be consistent with their business models or have filed incomplete or late SARs.”
- Firms are expected to have a understanding of when a SAR is complete and should consider having a template or checklist as part of their overall AML Quality Assurance program
- The SEC appears to have numerical expectations for the number of SARs filed
- The SEC continues to emphasize that an AML program must conform to the particular risks
In light of both regulators’ continued focus on AML compliance, firms should continue to bring enhanced efforts around designing and implementing AML compliance programs that detect and prevent money laundering. Additionally, firms need to routinely test their AML compliance systems. Firms should be making compliance a key function of operations, and encourage active compliance departments. This support may now be pertinent as a barometer of the firm’s compliance culture, which may in turn help to set the level of scrutiny in the examination or investigation processes from these regulators.