Which entities oversee broker-dealers' AML program compliance under the Bank Secrecy Act (BSA) rules?

Which entities oversee broker-dealers' AML program compliance under the Bank Secrecy Act (BSA) rules?

• A. The SEC and FINRA
• B. The Office of the Comptroller of the Currency
• C. The Federal Reserve
• D. The Internal Revenue Service

Answer: (A)

The key idea is who enforces the anti-money-laundering rules for broker-dealers. Broker-dealers are primarily regulated by the Securities and Exchange Commission, since they are registered under SEC rules. The Financial Industry Regulatory Authority, a self-regulatory organization that works with the SEC, handles the ongoing supervision and enforcement of broker-dealer AML programs, including ensuring the programs have proper policies, procedures, internal controls, training, independent testing, and suspicious activity reporting. FinCEN provides the overarching BSA framework, but the day-to-day oversight and enforcement for broker-dealers come from the SEC in conjunction with FINRA. The other regulators listed focus on banks or tax matters and don’t directly oversee broker-dealer AML programs.

The key idea is who enforces the anti-money-laundering rules for broker-dealers. Broker-dealers are primarily regulated by the Securities and Exchange Commission, since they are registered under SEC rules. The Financial Industry Regulatory Authority, a self-regulatory organization that works with the SEC, handles the ongoing supervision and enforcement of broker-dealer AML programs, including ensuring the programs have proper policies, procedures, internal controls, training, independent testing, and suspicious activity reporting. FinCEN provides the overarching BSA framework, but the day-to-day oversight and enforcement for broker-dealers come from the SEC in conjunction with FINRA. The other regulators listed focus on banks or tax matters and don’t directly oversee broker-dealer AML programs.