Compliance directors at U.S. broker-dealers no longer have to worry about who they can share their suspicions with when it comes to possible illegal money-laundering activities.

The Securities and Exchange Commission has now explicitly said that brokers can share copies of suspicious activity reports to the Financial Industry Regulatory Authority (FINRA), the self-regulatory agency for broker-dealers. That means FINRA no longer has to request copies of the reports from the SEC or the Financial Crimes Enforcement Network (FinCEN), the Treasury unit that handles the reports. The SEC's permission was cited in a January 26 letter sent by Carlo di Florio, who heads the regulatory agency's Office of Compliance, Inspections and Examinations to chief executives of FINRA regulated firms.

Financial firms registered with FINRA are required to file a report with FinCEN within 30 days of a suspicious transaction. However, the Treasury Department in early 2011 changed its rules to enhance confidentiality protection for SARs. That change prevented FINRA from asking brokerages for certain reports about suspicious activities and brokerages from offering them. Instead, FINRA had to request the reports from the SEC or FinCEN, a time-consuming process.

Brokerages had attempted to bypass that restriction by allowing FINRA's examiners to see, but not keep the reports when during their visits. However, such a practice was getting more difficult to implement because FINRA examiners were beginning to ask for the information remotely rather than through on-site visits.

The SEC's decision followed FinCEN's amendment to the Bank Secrecy Act which governs the confidentiality of SARs. That change required broker-dealers to make SARs and other supporting documentation available to any self-regulatory agency that examines broker-dealers.

FINRA says that its ability to get  the SARs directly from brokerages will help it better assess whether the brokerage is following anti-money laundering rules. Those rules include monitoring and reporting fraudulent trading activity.

Written by Chris Kentouris, Editor-in-chief (Chris can be reached through Chris.Kentouris@hotmail.com) 

The Loan Syndications and Trading Association, the U.S trade group for the syndicated loans market, is urging the U.S. Treasury and Internal Revenue Service to cut offshore collateralized loan obligations some slack when it comes to meeting the new U.S reporting requirements on U.S. investors living overseas.

The recent decision by the US Internal Revenue Service to delay the effective date for cost basis reporting rules for fixed-income instruments and options by a year came as a welcome relief to Wall Street.

 
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ConceptOne, a New York based risk management and regulatory reporting firm for fund managers, has tapped Asset Control to manage its market and reference data.

An extra year to prepare for any new regulatory requirements sounds great.

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