Suspicious activity goes beyond traditional money laundering, and includes activity associated with “potential securities fraud, insider trading and a wide variety of manipulative trading schemes,” according to Pete Driscoll, the Securities and Exchange Commission’s exam chief.
Such financial crimes may be carried out through account intrusions and other cyber-related crimes as well as identity theft, Driscoll stated in a recent speech, in which he highlighted key exam priorities for the agency this year.
In releasing its exam priorities in January, the SEC’s Office of Compliance Inspections and Examinations said examiners will review firms’ compliance and anti-money laundering requirements, including whether firms are appropriately adapting their AML programs to address their regulatory obligations.
Broker-dealers and mutual funds, he stated, “should consider their size, location and activities — including the types of transactions customers engage in, the products and services offered to customers, and the means by which those are offered — when determining whether an AML program and related internal controls are reasonably designed to mitigate the risks associated with their businesses.”
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As firms evolve, Driscoll stated, “they need to reassess their AML programs to address new and emerging risks and business practices.”
He stressed, however, that the exam office “is not here to second-guess decisions firms have made regarding implementation of their AML compliance programs or whether to file Suspicious Activity Reports,” or SARs, “provided those decisions appear reasonable under existing regulatory guidance as well as the firms’ own business activities and risk-based policies and procedures.”