Securities Industry Essentials (SIE) ExamOverview of Regulatory FrameworkHard
A broker-dealer firm is implementing a new anti-money laundering (AML) program. Which of the following is a key component required by FINRA and the Bank Secrecy Act to be included in the firm's AML program?
- AA designated AML compliance officer.
- BA requirement for all transactions to be approved by the SEC.
- CA quarterly review of all customer accounts by an independent auditor.
- DA system to guarantee customer account profitability.
Show answer & explanationAnswer & explanation
Correct answer: A. A designated AML compliance officer.
A key requirement for an AML program under FINRA and the Bank Secrecy Act is the designation of an AML compliance officer. This individual is responsible for overseeing the firm's AML program and ensuring compliance with regulations.
Why the other options are wrong
- B. The SEC does not approve individual transactions; that is a firm-level responsibility.
- C. While audits are important, a quarterly review of *all* accounts by an *independent* auditor is not a specific, universal requirement for AML programs; the scope and frequency can vary.
- D. Guaranteeing profitability is impossible and illegal in the securities industry.
AML Program Requirements
Anti-Money Laundering (AML) programs, mandated by the Bank Secrecy Act and FINRA, require broker-dealers to establish policies and procedures to detect and prevent money laundering, including designating an AML compliance officer.
- Mandated by Bank Secrecy Act and FINRA.
- Must have a designated AML Compliance Officer.
- Requires ongoing employee training.
- Requires independent testing of the program.
- Requires reporting of suspicious activities (SARs).
Memory trick: AML needs a 'C.O.T.S.' - Compliance Officer, Training, Testing, SARs.