Global: SEC Urges Broker Dealers to Strengthen Anti-Money Laundering Measures

The U.S. Securities and Exchange Commission (SEC) has issued a warning to certain broker dealers, urging them to enhance their policies and controls to combat money laundering. The SEC emphasized the importance of conducting thorough customer due diligence while opening accounts to prevent illicit activities.

In a notice published this week, SEC examiners revealed that some broker dealers have not allocated sufficient resources, including staff, to comply with anti-money laundering regulations. This lack of commitment hampers their ability to establish effective procedures to prevent money laundering as mandated by U.S. laws. Such firms are required to detect and report suspicious transactions and conduct comprehensive customer due diligence.

The regulator’s examinations further uncovered that some broker dealers did not conduct timely tests of their anti-money laundering programs, and some failed to perform comprehensive testing of their policies. Additionally, the SEC found that certain firms had not kept their programs updated in accordance with new regulations.

Although the notice did not mention specific firms, the SEC’s call to strengthen anti-money laundering measures serves as a broader reminder to the industry to remain vigilant and proactive in combating financial crime and ensuring compliance with regulatory requirements.