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Recent FINRA Guidance and Request for Comments – May 9, 2019 Recent FINRA Guidance and Request for Comments – May 9, 2019

Recent FINRA Guidance and Request for Comments – May 9, 2019

Guidance – Regulatory Notice 19-18 (Anti-Money Laundering Programs)

On May 9, 2019, the Financial Industry Regulatory Authority ("FINRA") issued guidance to member firms related to suspicious activity monitoring and reporting obligations under FINRA Rule 3310 (Anti-Money Laundering Compliance Program). The updated guidance provides a lengthy, but not exhaustive, list of examples of money laundering red flags for firms to consider incorporating into their anti-money laundering programs. While many member firms devote significant time and resources to implanting, testing and reviewing their anti-money laundering procedures, few firms have experience detecting actual money laundering through firm operations. FINRA's real-world guidance should provide greater depth of understanding to money laundering through broker-dealers. The guidance can be found here.

Request for Comments – Regulatory Notice 19-17 (Restricted Firm Obligations)

On May 2, 2019, FINRA published a request for comment on proposed new Rule 4111 (Restricted Firm Obligations) as well as a request for comment on the related proposed new Rule 9559 (Procedures for Regulating Activities Under Rule 4111). Rule 4111 would impose specifically-tailored obligations, including possible financial requirements, on member firms that cross specified disclosure-event thresholds. Applicable member firms would be firms that FINRA determines, through previous findings and/or specific calculations proposed in these rules, present heightened risk to investors. The firms also may be engaging in behavior and activities that could undermine confidence in the securities market as a whole. By requiring heightened financial obligations (including deposits of cash and/or securities), FINRA would be incentivizing member firms to comply with regulatory requirements and pay arbitration awards. The proposed rules can be found here.

For more information, contact Erik Hansen or another member of our Business Group.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader’s specific circumstances.

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