FINRA proposed amending its existing anti-money laundering ("AML") requirements to explicitly require ongoing customer due diligence, consistent with the May 11, 2018 effective date of the Financial Crimes Enforcement Network's ("FinCEN") Customer Due Diligence Requirements for Financial Institutions (the "CDD Rule").
In May 2016, FinCEN adopted the CDD Rule which will require covered financial institutions to include risk-based procedures for conducting ongoing customer due diligence. FINRA's proposed amendment to FINRA Rule 3310 will incorporate this requirement as part of a member firm's written AML program to include: (i) understanding the nature and purpose of customer relationships for developing a customer risk profile, and (ii) conducting ongoing monitoring to identify and report suspicious transactions and to maintain and update customer information. FINRA reminded members that these provisions are not new, and merely codify existing expectations for firms to identify and report suspicious transactions under the Bank Secrecy Act.
The effective date of the FINRA amendments coincides with the effective date of the CDD Rule, on May 11, 2018.
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