Published on Mar 29th, 2021 |

On Monday (March 29th, 2021) the Division of Examinations (“EXAMS”) released a Risk Alert regarding examinations they conducted from Broker-Dealers and Mutual Funds on their compliance with AML requirements.

They want to reiterate the fact that it is very important to provide firms a reminder to review their obligations under the AML rules and regulations to help further enhance their programs for AML.

For this Risk Alert it is important to takeaway two important topics covered throughout the release; Suspicious Activity Reporting and AML Policies, Procedures, and Internal Controls.

Below are important takeaways regarding these two topics and to read the full SEC Release click HERE!

AML Policies, Procedures, and Internal Controls are going to be crucial to review to make sure they are all established and implemented properly. 


Here are Five Takeaways about AML Policies, Procedures, and Internal Controls:

  1. Broker-Dealer is required to have policies, procedures, and internal contracts established and implemented to identify and report any suspicious transactions, which are a requirement by the BSA and their implementing regulations.
  2. To prevent any unlawful activities from occurring, a Broker-Dealer should incorporate those activities into their policies and procedures. This will help firms be prepared to identify any circumstances that could consider due diligence and potential reporting.
  3. Through observations, they found that manual review of trading turned out to be a cause for concern, as there were no procedures or controls established to discover any suspicious patterns or trends.
  4. Some firms failed to report on concerning transactions between the SAR reporting threshold of $5,000 and other firms’ uplifted thresholds.
  5. The overall takeaway from their observations toward AML policies, procedures, and internal controls was the failure of firms to implement procedures.


Suspicious Activity Reporting (SAR) is important, as a Broker-Dealer must file a SAR if any transactions of funds or assets are at least $5,000.

Below will be Four Key Takeaways and Observations regarding SAR:

  1. Broker-Dealers must file a SAR with FinCEN if funds are derived from illegal activity to hide or disguise any funds, or dodge any requirements implemented by the BSA.
  2. As a reminder, the Division of Examinations stress that the standard for the SAR Rule is that any time someone knows, suspects, or has reason to suspect anything that is should be filed.
  3. In order to file a SAR a Broker-Dealer must file within 30 days after the initial date of the suspicious activity.
  4. FinCEN has provided five important components of importation when reporting which should be: who, what, when, where, and why.
  5. The overall takeaway from their observations toward SAR was that Firms failed to respond to suspicious activity and filed inaccurate or incomplete SARs.