AML & Financial Crime

An effective anti-money laundering program is a critical tool to fight financial crime and protect the integrity of the capital markets and global financial system. 

Anti-money laundering and financial crime professionals at broker-dealers have a unique role in combatting illicit finance. Never has there been a more dynamic and hopeful time for their efforts to protect and ensure the preeminence of the U.S. capital markets. These professionals conduct substantial surveillance of fund movements in addition to transaction monitoring; they use Know Your Customer (KYC) processes to look critically at sources of funds for their customers to identify suspicious account openings or account fundings; and they regularly analyze activity to identify illicit schemes that may be new to their firms. They file a significant number of suspicious activity reports (SARs), aiding law enforcement’s investigative efforts.

The Anti-Money Laundering Act of 2020, which became law on January 1, 2021, is the most significant piece of AML-related legislation since the USA PATRIOT Act of 2001. SIFMA is committed to helping our members incorporate it into their risk-based programs, and we continue to engage with the Treasury and other policymakers on new and modified requirements focused on mitigating financial crime risks across the securities industry. Broker-dealers and other financial institutions hope that regulators tasked with implementing the Act remain faithful in their rulemakings to the AML Act’s purpose to modernize existing, cumbersome regulations that drain critical resources away from the most threatening illicit finance risks.

It is critical that we also look to new business lines and products, including the marijuana industry and digital assets, which may present the same or additional illicit finance risks. SIFMA has been at the forefront in assisting our members as they navigate this ever-changing and more complex landscape.

In February 2024, the Financial Crimes Enforcement Network (FinCEN) of the U.S. Department of the Treasury proposed applying anti-money laundering rules to investment advisers. The substantive requirements appear similar to existing U.S. AML rules for other financial institutions: covered advisers would be required to implement a risk-based AML program, designate a person responsible for program administration, conduct training, arrange for independent program reviews, keep records relating to the transmittal of funds, and file suspicious activity reports. Comments were due in April; SIFMA and SIFMA’s Asset Management Group are monitoring for further developments.

The financial industry dedicates tremendous time, diligence and resources to protecting our financial system. We remain committed to working together, sharing information and best practices, and learning from each other – all with the goal of protecting our markets from illicit financial activity and staying a step of those looking to exploit them.