target audience: TECH BUYER Publication date: Nov 2023 - Document type: IDC Perspective - Doc Document number: # US51354523
SEC Anti–Money Laundering Risk Alert
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Abstract
This IDC Perspective reviews the findings from the Securities and Exchange Commission (SEC) with respect to the anti–money laundering (AML) Risk Alert that was released at the end of July 2023. The issues and findings spelled out in the risk alert highlight several issues that should be of concern to all broker-dealers. Several of the issues identified by the SEC highlight areas where additional technological solutions, or improved technological solutions, can help address the shortcomings documented in the risk alert. Many of the issues identified deal with customer due diligence (CDD)/know your customer (KYC)/customer identification program (CIP) at broker-dealers. It would seem prudent for all broker-dealers to review their technological solutions in this space and consider enhancements or replacements to their existing solutions. Other issues, such as anti–money laundering training for those responsible for AML program testing may need to be addressed through additional training and/or anti–money laundering certifications.
Overall, the message from the SEC to broker-dealers seems quite clear. The message is that broker-dealers need to do better. They need to be more diligent about the AML training for their staff, their AML program testing, and documentation to evidence both activities are being conducted and completed appropriately. They need to have better ways of collecting and evidencing appropriate levels of customer due diligence and customer identification. Many of these issues can be addressed through technological solutions, and broker-dealers should make a concerted effort to review the areas referenced in the risk alert to address any shortcomings and ensure full compliance with SEC regulations and guidance.
"The numerous issues raised by the SEC in their recent risk alert should be a call to action for all broker-dealers to review and assess their capabilities, technological solutions, and compliance with anti–money laundering regulations," says Sean O'Malley, research director, IDC Financial Insights' Worldwide Compliance, Fraud, and Risk Analytics Strategies.