Anti-Money Laundering Procedures

You may have heard that anti-money laundering (AML) reviews have become a routine part of regulatory examinations for broker/dealers. However, are you aware that as an investment advisor, your AML procedures (or lack thereof) may be reviewed as well?

This appears to be the case even though the SEC and most states have not passed formal rules requiring advisor firms to establish AML procedures. In fact, there is a recent report of a state-registered investment advisor firm in Texas cited for having inadequate AML policies and procedures by the Texas State Securities Board. This action by the State of Texas was surprising due to the fact that Texas has not passed a rule requiring an advisor to establish AML policies.

There's talk within the industry that the SEC may soon pass a rule requiring investment advisor firms to create and implement procedures regarding AML. We recommend that all advisor firms be proactive in this area and implement AML procedures now as a best practice.

Until the SEC passes a formal rule for advisor firms, we encourage you to visit this NASD website page as it serves as an excellent start for formulating your own procedures. If you need further guidance, RIA Compliance Consultants is available to help you understand all of the issues surrounding AML so you can institute sufficient policies and procedures.

Labels: Compliance Program