April 02, 2021

SEC Division of Examinations Publishes Risk Alert on Broker-Dealer AML Practices


On March 29, 2021, the staff of the Division of Examinations (“EXAMS”) of the US Securities and Exchange Commission (“SEC”) published a Risk Alert regarding the anti-money laundering (“AML”) obligations of broker-dealers.  The Risk Alert highlights compliance issues related to suspicious activity monitoring and reporting observed by EXAMS over the course of its examinations of broker-dealers. 

For the past several years, AML compliance has been top-of-mind for the SEC (as well as other financial industry regulators) on an agency-wide basis.  The US Department of Justice brought the first criminal charges against a broker-dealer for violations of the Bank Secrecy Act (“BSA”) in 2018, and just last year, the SEC, in cooperation with the Financial Industry Regulatory Authority (“FINRA”) and the US Commodity Futures Trading Commission, assessed a total of $38 million in penalties to one broker-dealer for AML violations, including violations relating to suspicious activity monitoring and reporting.  FINRA has also been active in its enforcement of AML compliance, issuing fines into the multimillion-dollar range for AML compliance failures. 

In this Legal Update, we highlight key observations relating to suspicious activity monitoring and reporting made by EXAMS staff. 

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