Many firms may be wondering what to do about the annual independent test of your AML program amidst all the stay at home orders. Last week FINRA issued some guidance in its FAQs. We have listed that guidance below:
Q: My firm performed its annual independent AML testing in April 2019, but I’m concerned about the firm performing its next annual testing by April 2020.
A: FINRA is reminding member firms that they have until December 31, 2020 to perform the annual independent testing of the member’s AML compliance program. FINRA Rule 3310’s reference to a “calendar-year basis” means that, for most member firms, the independent testing must be performed at least once during each calendar year (i.e., between January 1 and December 31). This provides member firms with the ability to choose when to perform their independent testing within the calendar year, unless circumstances warrant more frequent testing.
Member firms that do not execute transactions for customers or otherwise hold customer accounts or do not act as introducing brokers with respect to customer accounts (e.g., engage solely in proprietary trading or conduct business only with other broker-dealers), may perform independent testing every two years (on a calendar-year basis) rather than on an annual basis. If a member firm qualifies for the two-year testing exception, and the last year in which an independent test was performed was in 2018, the member firm has until December 31, 2020 to perform its next independent testing.
Q: What can Cobia do to assist my firm if we wish to go ahead and get started with our testing?
A: Cobia utilizes Sharefile for secure file sharing and can provide document request lists and access to upload your information remotely. Depending on the lines of business you conduct, the entire process may be able to be done remotely for 2020. For more information, please contact me at email@example.com