A recent letter to the brokerage industry from the U.S. Securities and Exchange Commission has eased that concern. The agency clarified that brokerages can share copies of reports about suspected money laundering to their privately-funded regulator, the Financial Industry Regulatory Authority (FINRA).
FINRA says its ability to get that information directly from brokerages will help examiners better assess whether a brokerage is adequately complying with anti-money laundering rules. The requirements include monitoring for and reporting fraudulent trading activity.
Federal law has long required financial companies that suspect money laundering or fraud by customers to file so-called “suspicious activity reports”, or SARs, with the U.S. Treasury Department. But secrecy laws have made it tricky to easily share that information with private self-regulatory organizations.
In a letter to the industry on January 26, the SEC said that FINRA can now request the reports directly from brokerages during examinations and investigations, instead of having to take the extra steps of requesting them from the SEC or the Financial Crimes Enforcement Network, (FinCEN), the Treasury Department bureau that handles the reports.
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