SEC / FINRA
Prior to the SEC, securities trading was governed by
Blue Sky Laws
Sets global standards for combating money laundering and terrorist financing, including detailed KYC recommendations for member countries.
FATF
As the Basel AML Index I have __ Indicators in ___ domains
17 Indicators in 5 domains
Two (2) Red Flags for fake charities
No online presence, Large donation, High Risk Jurisdiction, Frequent repeat donations, Client unable to explain donation pattern
Three (3) of the Six (6) divisions that make up the SEC are
Corporate Finance, Trading and Markets, Investment Management, Enforcement, Economic and Risk Analysis, Examinations
Three (3) red flags at account opening
Incomplete or Inconsistent Information, Reluctance to Provide Required Documents, Unclear Source of Funds/Wealth, Unusual Business Structure (Complex Ownership), Politically Exposed Persons (PEPs) with Unexplained Wealth, Connections to High-Risk Countries, Adverse Media Linked to Client and Affiliates
Two (2) types of corruption reviewed by the Corruption Perception Index
Bribery, Diversion of public funds, Access to information on public affairs/government activities, Laws ensuring that public officials must disclose their finances and potential conflicts of interest, Legal protection for people who report cases of bribery and corruption, Nepotistic appointments in the civil service, Ability of governments to contain corruption in the public sector
Three (3) red flags for third-party Online Account Scams
Mismatched information between tax documents and KYC files, Clients unable to verify their own IRS records or accounts, Sudden influx of clients using new or unusual documentation
Three (3) SEC 2025 Priorities include
Artificial Intelligence (examine RIAs and Broker Dealers use of AI as well as their policies and procedures on its controls), Cyber Security (practices, data loss prevention, and responses), Cryptocurrency (standards of conduct, risk disclosures, operational resiliency, and compliance with relevant laws)
Four (4) Red Flags in Account closing
Account closed immediately after a large transaction, Rapid movement of funds, Unexplained large withdrawals or transfers (especially to high-risk jurisdictions or unknown entities), Pushback on compliance inquiries when asked about transactions, Refusal to provide updated KYC documents before closure, Account closure request follows a KYC inquiry, Avoidance of questions about the reason for closure, Conflicting information provided by the client.
This domain holds the highest weight percentage (50%)
Quality of AML/CFT/CPF Framework
Four (4) Dirty Dozen Scams include
Phishing and Smishing, Social Media Tax, Third-Party Online Account Scams, Fake Charities, False Fuel Tax Credit Claims, Improper Claims for Sick/Family Leave, Bogus-Self Employment Tax Credit, Improper Household Taxes, Overstated Withholding, Offer In Compromise Mills, Ghost Tax Return, New Client Scams
Imo's favorite food (or what gets ordered the most) is
Chipotle
According to FINRA Two (2) Emerging Risks regarding the use of Generative AI include
Investment club scams, New Account fraud and Account takeovers, Business Email Compromise, Ransomware Attacks, Imposter Scams, Market Manipulation
Three (3) Best practices for KYC Compliance
EDD, Automation, Regular Reviews, Employee Training
Four (4) ways to manage Risk
Internal Controls, Policies/Procedures, Due Diligence, Periodic Reviews, training, Audits, Risk Assessments, Risk-Based Approach, AML/KYC Fields in profiles
Unsigned tax returns, Client unfamiliar with preparer, Unusually high Adjusted Gross Income (AGI), Unusually high refunds
Four (4) honorable mentions to the AML Team - Little people or pets
Cookie, Bella, Tito, Max, Molly, William Milo (Bubba for short), Zoya
This FINRA rule requires that each firm develop and implement a written anti-money laundering (AML) program including CDD, Policies, independent testing, and ongoing training
3310
CAP is ...
Customer Acceptance Policy - Outlines criteria for accepting customers, including risk assessment based on occupation, geographic location, and source of funds.
The five (5) domains are
Quality of AML, CFT Framework, Corruption and Fraud Risks, Financial Transparency and Standards, Public Transparency and Accountability, Political and Legal Risk
Account takeovers, Business Email Compromise (BEC), Unauthorized transfers, Onboarding of synthetic identities, Regulatory scrutiny, Reputational risk