Independent AML Audit to address FINRA Anti-Money Laundering Requirements

While most firms conduct an independent AML Audit on an annual basis, the broker dealer may conduct the independent AML Audit every two years if the firm does not execute transactions for customers, otherwise hold customer accounts, or act as an introducing broker with respect to customer accounts.

According to FINRA, the independent AML auditor should have a working knowledge of relevant rules and regulations that affect the firm, an understanding of the firm’s business, experience as an independent AML auditor for broker dealers, and a comprehensive outlook on what will be conducted during the audit and included in the report. Important considerations when selecting an independent AML auditor are experience, financial expertise, and most importantly an understanding of the organizations products / delivery channels / geography. This specialized experience will enable an independent AML Auditor to determine possible areas of suspicious activity to be examined more closely.

An independent AML Audit should take into mind the firm's existing anti-money laundering policies and procedures to make sure the AML Compliance program is being implemented enterprise wide across the company. The independent AML auditor's level of familiarity with the company's industry necessary in order to conduct one of these independent AML audits begs the question - why not have someone at the company conduct the audit? FINRA regulations specify that the independent AML auditor conducting the review and delivering the report should not have involvement in the firm's transactions and be an independent party. During the review the independent AML auditor may want to view a sample of client transactions such CIP, SARs, AML Training Program, 314(a), Foreign Bank Certifications, 311 / 312 requirements, PEPs, 314(b), etc.