AML Training: Who Should Participate?

AML Guidance and Training Rules
Broker-dealers are expected to have training programs in place as part of their anti-money laundering compliance responsibilities. The purpose of this training is to educate associates on AML rules, best practices, and proper procedures so they can assist their firm in identifying and deterring potential money laundering activity.

Rules addressing the implementation of a training program are addressed in both the USA PATRIOT Act and FINRA regulations. Section 352 of the USA PATRIOT Act requires financial institutions to implement a training program. FINRA Rule 3310(e) requires that firms “Provide ongoing training for appropriate personnel.” NtM 02-21 provides additional guidance concerning AML programs. The guidance suggests a list of topics to be included in the training, addresses frequency, and regarding “appropriate personnel” it states:

Incorporation of money laundering compliance training into continuing education programs is recommended for both registered representatives and supervisors. A broker/dealer should scrutinize its operations to determine if there are certain employees who may need additional or specialized training due to their duties and responsibilities. For example, employees in Compliance, Margin, and Corporate Security may need more comprehensive training. The firm should train these employees or have these employees receive the appropriate instruction to ensure compliance with the Money Laundering Abatement Act.

Identifying Personnel for AML Training
Based on FINRA’s guidance, both registered representatives and supervisors should participate. But what about other persons associated with the broker-dealer? And what does FINRA mean by “scrutinize its operations”?

Basically, every firm should formulate its own risk-based policies and procedures around persons required to participate in AML training. The first step a firm may decide to take is to review the operations of the firm and ask, “Who could be in a position to detect potential money laundering activity?”

Persons involved in the following operational duties should be considered:

• Accepting, recording, or reviewing incoming monetary instruments such as currency, checks, and/or securities;
• Processing or reviewing wire transfers, check disbursements, or the journaling of funds or securities between clients;
• Interacting with clients for the purposes of gathering information, discussing transactions/activity, opening accounts, or closing accounts;
• Processing/handling of new customer documentation or changes to customer account documentation;
• Reviewing of incoming mail from customers;
• Any other account or client-related matter that could put the operations employee in a position to detect suspicious activity;
• Persons who participate in responsibilities required by the firm’s written AML policies and procedures, such as OFAC screening and FinCEN 314a reviews.

For persons not required to participate in training, the firm should be able explain to regulators why their job responsibilities do not put them in a position to detect suspicious activity or participate in the firm’s goal of detecting and deterring money laundering activity.

Training Deters Money Laundering
The above guidance is meant to assist your firm in deciding who should participate in anti-money laundering training. It is up to your firm to implement and maintain risk-based policies and procedures that address this. By maintaining a robust training program and training all necessary persons, your firm will increase its ability to detect and deter money laundering activity, while reducing regulatory exposure in this area.

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