SEC, NFA and OFAC Shed Light on Their AML Enforcement Efforts and Priorities

The effort to prevent and stamp out money laundering in the financial sector is a massive undertaking requiring constant diligence on the part of companies, financial institutions, law firms and, of course, regulatory agencies. Three U.S. agencies in particular – the SEC, the NFA and the Office of Foreign Assets Control (OFAC) – are largely responsible for carrying out the bulk of investigative and enforcement work in the anti-money laundering (AML) arena, and each has approached this responsibility in a different manner. See our two-part series on complying with the Financial Crimes Enforcement Network’s (FinCEN’s) proposed AML rule: “How FinCEN’s Proposed AML Rule Will Affect Hedge Fund Managers and Other Investment Advisers” (Jun. 30, 2016); and “Steps Hedge Fund Managers and Other Investment Advisers Should Take Now to Prepare” (Jul. 7, 2016). Additionally, AML efforts heavily depend on the ability and commitment of financial sector firms to file suspicious activity reports when they know of or suspect violations. These points came across in a recent Regulatory Compliance Association (RCA) panel featuring representatives from each of the aforementioned regulatory agencies: Jamie Rose, Deputy Chief of Regulated Industries Oversight for OFAC; Eric Kringel, Senior Counsel and Bank Secrecy Act Specialist in the SEC’s Division of Enforcement; and Valerie O’Malley, Director of the Compliance Department at the NFA. This article presents the takeaways from the panel of direct relevance to investment funds and broker-dealers. For coverage of other RCA events, see “Best Practices for Investment Advisers Using Social Media to Mitigate Advertising Rule Violations and Other Risks” (Mar. 23, 2017); and “Risks With Investment Allocation, Trade Execution, Soft Dollars, Client Solicitation and Valuation” (Apr. 14, 2016). On May 18, 2017, RCA will host its annual Enforcement, Compliance & Operations Symposium in New York City. For additional information or to register for the symposium, click here.

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